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December 21, 2011

NAHMA and Industry Stakeholders Meet with HUD to Discuss Bed Bugs Notice

On December 20, NAHMA attended a meeting with HUD officials and other industry representatives to discuss concerns related to HUD’s bed bug guidance, Notice H 2011-20, “Guidelines on Bed Bug Control and Prevention in HUD Insured and Assisted Multifamily Housing.”

Discussions focused around three central themes:

Industry objections to applicability of the notice to unassisted FHA-insured properties;
Industry concerns about use of limited project resources; and
Industry concerns about the notice’s effect on tenants’ compliance with treatment protocols and inspections.

All industry groups stood united in the position that Notice H 2011-20 must be rescinded. NAHMA was the first industry group to present its position on HUD’s bed bug policy. Our arguments were drawn from the comments on Notice H 2011-20 developed by the NAHMA Bed Bug Task Force and NAHMA Board of Directors.

A copy of NAHMA’s comments to HUD on Notice H 2011-20 may be found here: http://www.nahma.org/member/New%20HUD%20Docs/FINAL%20NAHMA%20Comments%20on%20HUD%20Bed%20Bug%20Notice%20Dec%20%201%202011.pdf

HUD staff said they would present the industry arguments in a briefing for the new Deputy Assistant Secretary for Multifamily Housing Marie Head, Associate Deputy Assistant Secretary for Multifamily Housing Janet Golrick and Acting Assistant Secretary for Housing Carol Galante. They believed the briefing would take place after the holidays in early January. HUD officials thought they would be able to report the senior leadership’s decision regarding the bed bug policy in about three to four weeks.

H.R. 3630: Middle Class Tax Relief and Job Creation Act of 2011

Yesterday, the House rejected the Senates amendment to H.R. 3630, which would have extended the payroll tax cut for two months. According to the White House, 160 million Americans could see paychecks shrink by two percent and as many as 2.5 million unemployed could lose their jobless benefits if a deal is not reached by January 1.

The issue has forced a standoff between the Democratic Senate, backed by President Obama, and the Republican-controlled House. The House GOP leadership has refused to support any payroll tax cut extension that is less than one year and has requested the Senate meet in conference to iron out the differences between the two bills. The Senate, in turn, support a stop-gap measure—a two month extension of the payroll tax cut and Medicare provisions—so that they may have additional time to discuss how to offset the extensions for the full year. Both the House and the Senate have adjourned for the holiday and are pressuring the other chamber to re-consider their version of H.R. 3630.
The bill, as amended by the Senate, would have also extended unemployment benefits and certain Medicare provisions for two months, as well as provide a permit for the Keystone XL Pipeline. The government would have offset these costs by charging guarantee fees for Fannie Mae, Freddie Mac, and FHA mortgages.

The original House bill would have authorized the creation of the Keystone XL pipeline from Canada all the way to the Gulf of Mexico, extend a number of business tax credits including the payroll tax reduction, reform and extend unemployment compensation, provide certain Medicare extensions, and extend the national flood insurance program. The House legislation would have offset these costs through reduced unemployment benefits, auctioning off the broadband spectrum, reforming Medicaid recaptures, mortgage guarantee fees charged by Fannie Mae and Freddie Mac, ending unemployment and supplemental nutrition assistance program benefits for millionaires, and freezing federal employee salaries.

At press time, neither the House GOP or Senate Democrats have given any indication of backing down and reconsidering the legislation. NAHMA will keep members informed as this process moves forward.

Rental Assistance Demonstration Program Meeting

On Monday, NAHMA and other industry stakeholder met informally with HUD officials to discuss issues surrounding the implementation of HUD’s Rental Assistance Demonstration (RAD) program, which was authorized in P.L. 112-55 (H.R. 2112), the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012.

P.L. 112-55 allows public housing and mod-rehab properties to convert to either project-based Section 8 contracts renewable under the Multifamily Assisted Housing Reform and Affordability Act Of 1997 (MAHRA) or project-based housing choice vouchers. The application period for PHAs to apply for the demonstration would last through September 30, 2015. The RAD language also allows RAP, Rent Supp, or Mod-Rehab properties whose rental assistance or long-term affordability restrictions terminated after October 1, 2006 to be eligible to convert tenant protection vouchers to project-based housing choice vouchers in FY 2012 and 2013.

The majority of the discussion centered around options for preserving Mod-Rehab properties. NAHMA will keep members informed as HUD moves forward with developing the rules and regulations for the RAD program.

December 16, 2011

Senate Rejects Balanced Budget Amendment

On Wednesday, the Senate rejected two balanced budget amendments. Both chambers of Congress were required to vote on a balanced budget amendment before the end of 2011 as part of the Budget Control Act passed last August. The House also rejected a balanced budget amendment last month.

The amendments needed support from 67 senators to pass. The Senate rejected an amendment offered by Sen. Orrin Hatch (R-UT) and backed by all Senate Republicans. It would have required Congress to balance the federal budget each year.

The Senate also rejected an alternative Democratic amendment offered by Sen. Mark Udall (D-CO), which would have required a balanced budget each year unless three-fifths of each chamber votes to waive the requirement or the U.S. has declared war. It would have protected Social Security from cuts and prohibited income tax breaks for people who earn more than $1 million a year.

H.R. 3630: Middle Class Tax Relief and Job Creation Act of 2011

On Wednesday, the House passed H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2011. The legislation would authorize the creation of the Keystone XL pipeline from Canada all the way to the Gulf of Mexico, extend a number of business tax credits including the payroll tax reduction, reform and extend unemployment compensation, provide certain Medicare extensions, and extend the national flood insurance program. The Senate is expected to vote on the measure tomorrow.

The legislation would offset these additional costs through reduced unemployment benefits, auctioning off the broadband spectrum, reforming Medicaid recaptures, mortgage guarantee fees charged by Fannie Mae and Freddie Mac, ending unemployment and supplemental nutrition assistance program benefits for millionaires, and freezing federal employee salaries.

A copy of the bill may be found here: http://rules.house.gov/Media/file/PDF_112_1/legislativetext/HR_1209.pdf

The Senate is expected to vote on the measure tomorrow.

H.R. 3661 & S. 1989: Extending the Flat Rate 9 percent LIHTC

On Wednesday, Congressmen Pat Tiberi (R-OH) and Richard Neal (D-MA) and Senators Maria Cantwell (D-WA) and Olympia Snowe (R-ME) introduced legislation to permanently extend the flat 9 percent credit rate and create a flat 4 percent credit rate for allocated LIHTCs.

The 9 percent flat rate credit for new construction and substantial rehabilitation LIHTCs, which was authorized by the Housing and Economic Recovery Act of 2008, is set to expire next year. The bill would extend the 9 percent flat rate credit indefinitely and apply a flat rate of 4 percent to the property acquisition LIHTCs.

NAHMA supports these bills. We believe they would remove the uncertainty and financial complexity of the LIHTC floating rate system, simplify state administration, and facilitate preservation of affordable housing at little or no cost to the federal government.

NAHMA encourages our members to contact their Congressional representatives ASAP and encourage them to cosponsor H.R. 3661 and S. 1989 in their respective Chambers if they have not co-sponsored the bills already. Please ask your Congressmen to contact Brad Bailey in Congressman Tiberi’s office at 202-225-5355 and Senators should contact Eric Gulick in Senator Cantwell’s office at 202-224-3441 if interested in cosponsoring the bills.

For information on contacting your Congressional representatives, please visit: http://www.nahma.org/content/grassroots.html

The bills have been referred to the House Ways and Means and Senate Finance Committees respectively.

Galante Nomination Approved by the Senate Banking Committee

On Tuesday, the Senate Banking Committee reported favorably on Carol Galante ’s nomination to become HUD’s next Assistant Secretary for Housing and FHA Commissioner. She currently serves as the Acting Secretary for Housing.

Galante ’s nomination will now go before the full Senate for a confirmation vote. However, some Senate Republicans have threatened to delay and/or block the nomination vote over concerns of the health of the FHA. They fear the agency may require a bailout in the near future. NAHMA will continue to inform members as Galante’s nomination moves forward in the Senate.

H.R. 3644: Private Mortgage Market Investment Act

On Wednesday, the House Financial Services Capital Markets and GSEs Subcommittee approved an amended version of H.R. 3644, the Private Mortgage Market Investment Act.

The bill is part of Subcommittee Chairman Scott Garrett’s (R-NJ) plan to wind down the government sponsored entities and remove government involvement in the housing finance market. While the legislation would do nothing to wind down Fannie Mae and Freddie Mac or remove government guarantees from mortgages, it would set up a qualified securitization market through the creation of a category system for mortgages, in order to help identify and price credit risk associated with mortgages.

NAHMA and industry colleagues do not believe a completely private housing finance system is the answer. We strongly support some form of government backing in order to guarantee continued liquidity in the multifamily mortgage market. We will continue to work with Congress as they develop proposals to reform the housing finance system.

The legislation will now go before the full House Financial Services Committee for a mark-up.

H.R. 3619: Permanently Protecting Tenants at Foreclosure Act of 2011

Last week, Rep. Keith Ellison (D-MO) introduced legislation that would permanently extend the Protecting Tenants at Foreclosure Act, which was included in S. 896, the Helping Families Save Their Homes Act, passed by Congress in 2009.

The bill would remove the December 31, 2012 sunset of the tenant protection provisions that was included in S. 896. The tenant protection provisions of the act allowed renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease, unless the property is sold to someone who will occupy the home.

The bill also provided similar protections to housing voucher holders but requires purchasers of foreclosed buildings who receive Section 8 HAPs to honor the existing lease unless they plan to live in the building. If they plan to use the building as primary residence they must give 90 days notice to the tenant.

NAHMA previously opposed these provisions because we believed the language would create more problems than it attempted to solve and could make it difficult to sell foreclosed rental properties.
However, H.R. 3619 includes a new provision that would allow tenants to bring civil action against any landlords who violate these tenant protections and would require landlords to pay the litigation costs of tenants that win their suits. NAHMA is extremely concerned by this provision because it has the potential to increase frivolous lawsuits in the case of a property foreclosure.
The bill has been referred to the House Financial Services Committee. However, it is unlikely to be taken up by the Republican majority leadership because it was introduced by Democrats and only has Democrat sponsors.

December 9, 2011

House Budget Committee Republicans Propose Budget Process Reforms

On Wednesday, House Budget Committee Chair Paul Ryan (R-WI) and House Budget Committee Republicans proposed a legislative package containing 10 budget process reform bills to control spending, increase government oversight, and improve budgetary transparency. The acts are as follows:

The Legally Binding Budget Act
- Give the Congressional budget the force of law and require the President’s signature, meaning Congressional appropriators would have to follow the budget’s spending guidelines.
The Spending Control Act
- Establishes binding limitations on federal spending and deficits.
- This would be enforced by across-the-board cuts if spending exceeds the limits set forth by the bill. However, legal contractual obligations would be exempt from sequestration.
The Expedited Line-Item Veto and Rescissions Act
- Require Congress to expedite consideration of Presidential requests to reduce discretionary spending.
The Biennial Budgeting and Enhanced Oversight Act
- Establishes a biennial budgeting cycle where Congress adopts a budget resolution in the first session of Congress (i.e., odd-numbered years) and considers authorization legislation in the second session, providing greater opportunities for review of government spending.
The Baseline Reform Act
- Removes the automatic inflation increases in discretionary spending accounts.
The Government Shutdown Prevention Act
- Enacts an automatic continuing resolution for government programs at a 1 percent reduction from the previous fiscal year’s appropriations levels if Congress fails to pass the relevant appropriations acts by the beginning of the new fiscal year (Oct. 1).
The Review Every Dollar Act
- Requires periodic sunset reviews and reauthorization of all federal programs; and
- Requires any new rule or regulation promulgated by the administration that includes new spending to be explicitly funded by Congress before such regulations take effect.
The Balancing our Obligations for the Long Term Act
- Caps total spending over the long term;
- Requires Congress to review long-term budget trends every five years;
- Requires CBO and the Presidential budget estimates to extend beyond the 10-year window; and
- Requires GAO and OMB to report annually on the federal government’s unfunded obligations.
The Budget and Accounting Transparency Act
- Incorporate Fair Value accounting principles in the budget;
- Brings the government sponsored entities and US Postal Services costs into the budget.
- Requires a CBO & OMB study on offsetting receipts/collections/revenues; and
- Requires all federal agencies to make their budget request justification materials public.
The Pro-Growth Budgeting Act
- Requires CBO to provide an assessment of the macroeconomic impact of major legislation.

More information on these proposals may be found here: http://budget.house.gov/BudgetProcessReform/

NAHMA plans to review these proposals in conjunction with our Federal Affairs Committee to determine their potential impact on affordable multifamily housing programs and any necessary next steps.

Nevertheless, even if these legislative proposals pass the House, the Senate Democratic leadership is unlikely to consider them, let alone attempt to pass them. We will keep members informed of any action we take on these proposals and the status of these proposals in Congress.

H.R. 3076: Amending the LIHTC Student Rule to Include Formerly Homeless Youth

In October, Rep. Jim McDermott (D-WA) introduced legislation, H.R. 3076, to provide an exemption for formerly homeless youth in the LIHTC student rule. The bill has been referred to the House Ways and Means Committee

NAHMA ran this legislation through our formal policy approval process. NAHMA membersdecided to support the legislation. However, our support for the bill is not in lieu of our larger goal: a single student occupancy rule for all federal affordable housing programs. In fact, NAHMA has reached out to Representative McDermott’s office in an effort to begin a larger discussion in Congress regarding the need for a single student rule between USDA, Treasury, and HUD multifamily housing programs.

NAHMA will keep members informed as H.R. 3076 and our efforts to pass a single student rule move forward.

H.R. 3603: Authorizing 150,000 Incremental Housing Choice Vouchers

Yesterday, Rep. Steve Rothman (D-NJ) introduced a bill to authorize 150,000 incremental vouchers for tenant-based Section 8 rental assistance 7 to help meet the housing needs of low-income families.

A similar proposal was in the 111th Congress’s Section 8 Voucher Reform Act. NAHMA supports increasing the number of housing choice vouchers.

The bill has been referred to the House Financial Services Committee.

S. 1963: Mortgage Finance Act

Yesterday, Senator Johnny Isakson (R-GA) introduced S. 1963, the Mortgage Finance Act. The bill would wind down Fannie Mae and Freddie Mac and, upon the resolution of the government sponsored entities’ (GSE) obligations, create a transitional Mortgage Finance Agency for the securitization of single family and multifamily mortgages. The Mortgage Finance Agency would guarantee securitizations of high-quality mortgages for a 10-year period after which the operation would be sold to the private sector.

The Mortgage Finance Agency will charge guarantee fees to cover any unexpected losses from market downturns, purchase supplemental insurance from the private-sector, and fund agency operations. Multifamily mortgages obtained from this transitional agency would be required to meet proven industry standards for high-quality multifamily mortgages.

The bill has been referred to the Senate Banking Committee. More information on the bill may be found here: http://isakson.senate.gov/press/2011/120811StopTaxpayerBailouts.html

H.R. 3298: Homes for Heroes Act of 2011

Yesterday, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee approved H.R. 3298, the Homes for Heroes Act of 2011. H.R. 3298 would authorize the creation of a Special Assistant for Veterans Affairs within HUD and require HUD and the Department of Veterans Affairs to publish an annual report on veterans’ homelessness.

The bill will now go before the full House Financial Services Committee for mark-up.

December 2, 2011

Rep. Barney Frank to Retire

On Monday, House Financial Services Committee Ranking Member Barney Frank (D-MA) announced that he would not seek re-election in 2012. The Ranking Member has been a champion of access to affordable housing during his 30 years in Congress.

Ranking Member Frank has also announced that he is no longer interested in becoming HUD Secretary. In the past, Frank publically stated he was interested in the position.

Rep. Maxine Waters (D-CA) is next in line for the House Financial Services Committee Democratic leadership position based on seniority.

Deficit Reduction Update

Following the failure of the Joint Select Committee on Deficit Reduction—also known as the “Super Committee”—to reach an agreement on a plan to reduce government spending, there is already much speculation on what will occur with the automatic across-the-board cuts scheduled to begin in 2013. Social Security and Medicaid would be exempted from the cuts, and Medicare would only face cuts to providers and insurers, not beneficiaries. Cuts to housing programs in FY 2013 and beyond are likely unless the sequestration law is changed; however, we cannot speculate how severe those cuts may be at this time.

There is already talk in Congress about scaling back sequestration, with particular emphasis on defense spending. However, President Obama has publically stated that he will veto any effort to shift or scale back the across-the-board cuts from what was approved in P.L. 112-25 (S. 365), the Budget Control Act.

NAHMA will inform members as Congressional appropriators move forward with budget reduction efforts.

S. 1892: Housing Rights for Victims of Domestic and Sexual Violence Act

In mid-November, Senator Al Franken (D-MN) introduced S. 1892, the Housing Rights for Victims of Domestic and Sexual Violence Act. The legislation would expand housing rights of victims of domestic violence, dating violence, sexual assault, and stalking residing in Federally assisted properties.

The act would:

Extend the Violence Against Women Act’s (VAWA) housing protections to victims of sexual assault;
Extend VAWA’s housing protections to new federal housing programs including:
- Section 202 and 811;
- Homelessness assistance;
- Section 236;
- Public housing;
- All Section 8 programs including the housing choice voucher;
- All rural housing programs administered by USDA-RD; and
- The LIHTC; and
Provide emergency transfer policies, which will allow victims to move to other available housing units if they would remain in danger by staying in their current home.

NAHMA and other industry partners are concerned about extending VAWA to LIHTC properties due to the possibility of recapture. We are also concerned about the practicality of the emergency transfer policies.

NAHMA plans to run this legislation through its public policy process in order to provide members the opportunity for a more thorough examination and consideration of the bill.

The bill has been referred to the Senate Banking Committee.

H.R. 3502: Project Rebuild Act

This week, Rep. Maxine Waters (D-CA) introduced H.R. 3502, the Project Rebuild Act. The act is a piece of President Obama’s larger American Jobs Act proposed in September.

The Project Rebuild program, modeled after the Neighborhood Stabilization Program, would authorize appropriations of up to $15 billion to help rehabilitate vacant and foreclosed homes and businesses in order to increase construction jobs. Key components of the program include:

Focusing on distressed commercial properties and redevelopment to stabilize communities;
Including for-profit entities to gain expertise, leverage federal dollars and speed program implementation;
Increasing support for “land banking”; and
Creating jobs through maintaining properties and eliminating community blight.

The bill would also give grant preference to projects that create affordable rental housing.

The legislation has been referred to the House Financial Services Committee.

H.R. 3539: HOPE VI Program Termination Act of 2011

Yesterday, Rep. Francisco Canseco (R-TX) introduced H.H. 3539, the HOPE VI Program Termination Act of 2011. The bill would eliminate the HOPE VI program from HUD. Funds appropriated for HOPE VI prior to the enactment of this bill could still be used for their intended purposes. The program would be terminated when all funding obligated prior to the passage of this act had been distributed. All unobligated funding remaining for HOPE VI upon the enactment of this legislation would be rescinded.

NAHMA opposes eliminating the HOPE VI program. The legislation has been referred to the House Financial Services and Appropriations Committees.

H.R. 3546: Senior Veterans Housing Assistance Act of 2011

Yesterday, Rep. Michael Turner (R-OH) introduced H.R. 3546, the Senior Veterans Housing Assistance Act of 2011. The bill would give occupancy preference for veterans in Section 202 projects that are located on land owned or leased by the Department of Veterans Affairs.

The legislation has been referred to the House Financial Services Committee.

November 18, 2011

H.R. 2112: Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012

Yesterday, Congress passed H.R. 2112, the minibus containing the conferenced versions of the Agriculture, Commerce, Justice, and Science, and Transportation-HUD FY 2012 appropriations acts. The legislation provides full-funding for project-based Section 8, tenant-based Section 8, Section 202 and 811 PRACs, and rural rental assistance contracts. The legislation, however, significantly cuts funding for new construction and rehabilitation programs below FY 2011 levels.

The bill also contains an extension of the continuing resolution, which expires today, for all other Federal programs through December 16, 2011.

President Obama is expected to sign the bill into law today.

H.R. 2112-HUD Funding

H.R. 2112 funds HUD multifamily programs at the following levels for FY 2012:

FY 2012 Tenant-Based Section 8: $18.9 billion (total); $17.24 billion (housing choice voucher contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $112 million for Section 811 vouchers.
- FY 2012 Budget Request: $19.2 billion (total); $17.1 billion (contract renewals) which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2011 Appropriation: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers.
FY 2012 Project-Based Section 8: $9.3 billion total; $9.05 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2012 Budget Request: $9.4 billion total; $9.1 billion for contract renewals and $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Requested the authority to allow PBCAs to administer the following programs: Section 236(a) interest reduction; Rent Supp; Section 236(f); Section 811 PRACs; and Section 202 PRACs and loans.
- FY 2011 Appropriation: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
FY 2012 Section 202: $374.6 million; $269 for PRACs, amendments to capital advances, and senior preservation rental assistance contracts; of the total funding $91 million for Service Coordinators, and $25 million for assisted living and services enriched conversions
- FY 2012 Budget Request: $757 million; $259 million for PRACs, $387 million for capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- FY 2011 Appropriation: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances
FY 2012 Section 811: $165 million for PRACS and capital advance amendments

There is no funding for new construction.

FY 2012 Budget Request: $196 million; $85 million to renew and amend operating subsidy contracts for existing Section 811 housing
FY 2011 Appropriation: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts

Transforming Rental Assistance (TRA) Proposed by the Senate for FY 2012: $0
- Transforming Rental Assistance (TRA) Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $200 million
- FY 2011 Appropriation: $0

While no money is given for the TRA program, the bill grants HUD the authority to conduct a Rental Assistance Demonstration (RAD) program, which would allow public housing and mod-rehab properties to convert to project-based Section 8 contracts under the Multifamily Assisted Housing Reform and Affordability Act Of 1997 (MAHRA). The application period for PHAs to apply for the demonstration would last through September 30, 2015. The RAD language also allows RAP and Rent Supp properties that have lost their rental assistance or long-term affordability restrictions after October 1, 2006 to be eligible to convert tenant protection vouchers to project-based housing choice vouchers in FY 2012 and 2013.

FY 2012 HOPE VI: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $100 million; Up to $65 million may be used for Choice Neighborhoods
FY 2012 Choice Neighborhoods: $120 million
- FY 2012 Budget Request: $250 million
- FY 2011 Appropriation: Up to $65 million from the HOPE VI account
FY 2012 HOME: $1 billion
- FY 2012 Budget Request: $1.65 billion
- FY 2011 Appropriation: $1.61 billion

The legislation requires HUD to provide Congress with information on how HUD is monitoring and evaluating grantee performance in the HOME program, including how participating jurisdictions get approval to restart a stalled or cancelled project. The legislation also directs HUD to provide a report by March 16, 2012, and annually thereafter, on all HOME funds that are 5 years old or older. The bill also contains general provisions requesting studies from the General Comptroller on the effectiveness of HUD’s Community Planning and Development block grant programs and HUD on problems in Community Planning and Development programs and how the Department plans to address them.

FY 2012 CDBG: $2.95 billion for block grants
- FY 2012 Budget Request: $3.7 billion for block grants
- FY 2011 Appropriation: $3.5 billion; $3.34 billion for block grants
FY 2012 LEP: $300,000
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $500,000
FY 2012 Affordable Housing Trust Fund: $0
- FY 2012 Budget Request: $1 billion
- FY 2011 Appropriation: $0

H.R. 2112 includes an extension of the Mark-to-Market (M2M) program through September 30, 2015. NAHMA strongly supported extending the M2M program.

The Senate’s language that would have removed the October 1 publication requirement for FMRs has been removed in its entirety.

H.R. 2112-USDA-RD Funding

H.R. 2112 would fund USDA-RD multifamily programs at the following levels for FY 2012:

FY 2012 Rural Rental Assistance: $905 million
- FY 2012 Budget Request: $907 million
- FY 2011 Appropriation: $956 million
FY 2012 Section 515 Housing Direct Loans: $64.5 million
- FY 2012 Budget Request: $95 million
- FY 2011 Appropriation: $69.5 million
FY 2012 Section 538 Housing Loan Guarantees: $130 million
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans
FY 2012 Multifamily Housing Revitalization Program: $13 million; $11 million for vouchers and $2 million for the demonstration program
- FY 2012 Budget Request: $16 million for housing vouchers
- FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

A NAHMAnalysis on the conferenced version of H.R. 2112 is forthcoming.

Joint Select Committee on Deficit Reduction Update

The deadline for the Joint Select Committee on Deficit Reduction, as known as the “Super Committee,” to develop and vote on a deficit reduction plan is fast approaching. The Super Committee has been tasked with identifying and approving at least $1.2 trillion in spending cuts and revenue increases over the next 10 years by November 23 or else across-the-board cuts in government spending will be enacted beginning in FY 2013. However, while many proposals have been floated, no formal plan has yet to be announced.

In fact, tax reform has still been a strong source of contention within the Super Committee. The Democrats are strongly insisting revenue-increasing measures, like tax increases or closing tax loopholes, be included in the plan. Republicans have backed off their initial “no tax increases” position and have agreed to include up to $300 billion in revenue increasing measures as long as all of the Bush tax cuts are extended permanently for all income brackets. However, extending the Bush tax cuts would be more costly than the proposed revenue increases the Republicans would agree too, making the issue a non-starter for Democrats.

NAHMA has calls in to the Super Committee member offices requesting clarification on whether a deal is close or if the Committee is planning to request a deadline extension. We are looking for details on the status of the negotiation and a possible public mark-up of the deficit reduction plan sometime next week. At least one office has told NAHMA that negotiations are still ongoing. At press time, no plans have been made for extending the Committee’s deadline. NAHMA will keep members informed as the Super Committee moves forward with their deficit reduction plan.

Even if the Committee does develop and approve a deficit reduction plan by November 23, Congress must pass it by December 23 or across-the board cuts will be enacted.

Senate Banking Committee Hearing on HUD Nominees

Yesterday, the Senate Banking Committee held a hearing on the following Obama Administration nominees: Maurice Jones to be HUD’s Deputy Secretary; Carol Galante to be HUD’s Assistant Secretary of Housing and FHA Commissioner; and Thomas Hoenig to be Vice Chairperson and a Member of the Board of Directors for the Federal Deposit Insurance Corporation.

The majority of the Committee’s questions for Acting FHA Commissioner Galante focused on single-family housing and reducing mortgage risks in FHA’s portfolio. Mr. Jones was asked about how he planned to improve oversight and efficiency within the HOME program.

For more information on the hearing, please visit: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=d02e0f9d-99e7-404c-b6ce-8dd2e95ad42c

November 11, 2011

H.R. 2112: Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012

Last week, the Senate passed H.R. 2112, the minibus containing the Agriculture, Commerce, Justice, and Science, and Transportation-HUD FY 2012 appropriations act. Currently, the House and the Senate are in conference, negotiating details of the minibus. The final vote is expected on November 17.

Congressional conferees include: Senators Herb Kohl (D-WI), Tom Harkin (D-IA), Diane Feinstein (D-CA), Tim Johnson (D-SD), Ben Nelson (D-NE), Richard Pryor (D-AR), Sherrod Brown (D-OH), Daniel Inouye (D-HI), Patty Murray (D-WA), Barbara Mikulski (D-MD), Roy Blunt (R-MO), Thad Cochran (R-MS), Mitch McConnell (R-KY), Susan Collins (R-ME), Jerry Moran (R-KS), John Hoeven (R-ND), Kay Bailey Hutchison (R-TX), and Richard Shelby (R-AL); and Representatives Hal Rogers (R-KY), Bill Young (R-FL), Jerry Lewis (R-CA), Frank Wolf (R-VA), Jack Kingston (R-GA), Tom Latham (R-IA), Robert Aderholt (R-AL), Jo Ann Emerson (R-MO), John Culberson (R-TX), John Carter (R-TX), Jo Bonner (R-AL), Steve LaTourette (R-OH), Norm Dicks (D-WA), Rosa DeLauro (D-CT), John Olver (D-MA), Ed Pastor (D-AZ), David Price (D-NC), Sam Farr (D-CA), Chaka Fattah (D-PA), and Adam Schiff (D-CA).

Yesterday, NAHMA sent a letter to the Congressional conferees requesting them to provide a strong budget for HUD’s affordable housing programs in the FY 2012 appropriations. A copy of that letter may be found here: http://www.nahma.org/Leg%20area/NAHMA%20FY%202012%20THUD%20Approps%20Letter%20111011.pdf

NAHMA strongly encourages you to call your Representatives ASAP (especially if they are Congressional conferees), request to speak with their staffer that handles appropriations issues, and urge them to support an appropriations bill that provides:

Full 12-month funding for:
- Section 202 and 811 PRACS;
- Tenant-based Section 8;
- Project-based Section 8; and
- Rural rental assistance contracts;
Increased funding for:
- HOME;
- CDBG;
- Section 515;
- The Rural Multifamily Housing Revitalization Program; and
- Capital advances for new construction of Section 202 and 811 units;
Continued funding for the Section 538 program;
An extension of the M2M mortgage restructuring program through September 30, 2015; and
Continued funding for limited English proficiency (LEP) technical assistance; and
Does not eliminate the required October 1 publication date of HUD FMRs from statute.

House to Vote on Balanced Budget Amendment

Next week, the House plans to vote on a Balanced Budget Amendment. Both chambers of Congress agreed to vote on a balanced budget amendment to the Constitution before the end of the year as part of a deal between Republicans and Democrats to raise the debt ceiling last August.

The amendment, if passed by 2/3 of each chamber of Congress and ratified by ¾ of the states, would block Congress from spending more than it receives unless a supermajority in both chambers votes otherwise, it would also require a three-fifths vote to raise the debt ceiling and require the president to submit a balanced budget to Congress.

Nevertheless, the vote is largely symbolic. There is not enough support to pass the amendment in the Senate.

New Multifamily DAS Appointed

This week, the Obama Administration appointed Marie Head for the position of Deputy Assistant Secretary in the Office of Multifamily Housing Programs. This appointment does not require confirmation by the Senate like other Presidential appointments.

Ms. Head recently served as the President of Prudential Huntoon Paige, the FHA lending business of the Prudential Mortgage Capital Company. Previously, she spend 20 years as the production chief of HUD’s Atlanta Hub.

HUD and RHS Launch Physical Inspection Reduction Pilot

On November 7, HUD and USDA-RHS announced the Obama Administration was moving forward with a pilot program aimed at reducing physical inspections for multifamily properties receiving multiple federal subsidies. This pilot program was originally proposed in the White House’s "Rental Policy Working Group Federal Rental Alignment Opportunities -Conceptual Proposals,” published July 2011.

The pilot will take place in Wisconsin, Michigan, Washington, Minnesota, Oregon and Ohio. NAHMA is seeking additional details on the pilot program from HUD and RHS on how the program will be implemented and the timeframe for implementation. We will provide NAHMA members with information on the pilot as it becomes available.

S. 1834: Residential Mortgage Market Privatization and Standardization Act of 2011

This week, Senator Bob Corker (R-TN) introduced legislation to unwind Fannie Mae and Freddie Mac over the next decade and replace them is a private secondary mortgage market without government guarantees. Under the legislation, the Federal Housing Finance Agency Director would work with industry stakeholders to create deliverability rules and update monitoring technology in order to create the private mortgage market. In addition, the bill would create a public database in order to collect uniform performance and origination data for mortgages and establish uniform mortgage underwriting standards. The bill would also repeal a pending requirement that lenders maintain some of a mortgage’s credit risk unless borrowers have down payments of at least 20 percent and replace it with a 5 percent down payment requirement with extensive documentation.

The bill has been referred to the Senate Banking Committee.
NAHMA and industry colleagues do not believe a completely private housing finance system is the answer. We strongly support some form of government backing in order to guarantee continued liquidity in the multifamily mortgage market. We will continue to work with Congress as they develop proposals to reform the housing finance system.

November 4, 2011

H.R. 2112: FY 2012 Agriculture, T-HUD, and Commerce, Justice, and Science Appropriations Act

This week, the Senate passed the first of three “minibus” bills to move FY 2012 Appropriations legislation forward. The minibus, H.R. 2112, contains the FY 2012 Agriculture, Transportation-HUD, and Commerce, Justice, and Science (CJS) Appropriations Acts. Before the bill’s final passage, the Senate wisely voted down Sen. Tom Coburn’s (R-OK) Amendment 800 to H.R. 2112, which would have cut funding for USDA-RD programs by 40 percent.

H.R. 2112-HUD Funding

H.R. 2112, as passed by the Senate, proposes funding HUD multifamily programs at the following levels for FY 2012:

Tenant-Based Section 8 Proposed by the Senate for FY 2012: $18.9 billion (total); $17.1 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $113 million for Section 811 vouchers.
- Tenant-Based Section 8 Proposed by the House for FY 2012: $18.5 billion (total); $17 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $114 million for Section 811 vouchers.
- FY 2012 Budget Request: $19.2 billion (total); $17.1 billion (contract renewals) which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2011 Appropriation: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers.
Project-Based Section 8 Proposed by the Senate for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Project-Based Section 8 Proposed by the House for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2012 Budget Request: $9.4 billion total; $9.1 billion for contract renewals and $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Requested the authority to allow PBCAs to administer the following programs: Section 236(a) interest reduction; Rent Supp; Section 236(f); Section 202 and 811 PRACs; and Section 202 PRACs and loans.
- FY 2011 Appropriation: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
Section 202 Proposed by the Senate for FY 2012: $370 million; $269 for PRACs and capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- Section 202 Proposed by the House for FY 2012: $600 million; $395 million for PRACs and capital advances, $80 million for Service Coordinators, and $25 million for assisted living and services enriched conversions
- FY 2012 Budget Request: $757 million; $259 million for PRACs, $387 million for capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- FY 2011 Appropriation: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances
Section 811 Proposed by the Senate for FY 2012: $150 million for PRACS and new construction
- Section 811 Proposed by the House for FY 2012: $196 million for PRACS and new construction
- FY 2012 Budget Request: $196 million; $85 million to renew and amend operating subsidy contracts for existing Section 811 housing
- FY 2011 Appropriation: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts
Transforming Rental Assistance (TRA) Proposed by the Senate for FY 2012: $0
- Transforming Rental Assistance (TRA) Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $200 million
- FY 2011 Appropriation: $0

While no money is given for the TRA program, the bill does grant HUD the authority to conduct a Rental Assistance Demonstration (RAD) program, which would allow public housing properties to convert to project-based Section 8 contracts under the Multifamily Assisted Housing Reform and Affordability Act Of 1997 (MAHRA). The RAD language would not apply to RAP, Rent Supp, or Mod-Rehab properties. The demonstration would last through September 30, 2015.

HOPE VI Proposed by the Senate for FY 2012: $0
- HOPE VI Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $100 million; Up to $65 million may be used for Choice Neighborhoods

Choice Neighborhoods Proposed by the Senate for FY 2012: $120 million
- Choice Neighborhoods Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $250 million
- FY 2011 Appropriation: Up to $65 million from the HOPE VI account
HOME Proposed by the Senate for FY 2012: $1 billion
- HOME Proposed by the House for FY 2012: $1.2 billion
- FY 2012 Budget Request: $1.65 billion
- FY 2011 Appropriation: $1.61 billion
CDBG Proposed by the Senate for FY 2012: $2.85 billion for grants
- CDBG Proposed by the House for FY 2012: $3.5 billion for grants
- FY 2012 Budget Request: $3.7 billion for grants
- FY 2011 Appropriation: $3.5 billion; $3.34 billion for grants
LEP Proposed by the Senate for FY 2012: $300,000
- LEP Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $500,000
Affordable Housing Trust Fund Proposed by the Senate for FY 2012: $0
- Affordable Housing Trust Fund Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $1 billion
- FY 2011 Appropriation: $0

H.R. 2112 includes an extension of the Mark-to-Market (M2M) program. NAHMA supports extending the M2M program through September 30, 2015.

However, the bill still includes provisions that would eliminate the requirement for the publication of fair market rents (FMR) by October 1. NAHMA opposes removing a FMR publication date from the statute.

H.R. 2112-USDA-RD Funding

H.R. 2112 proposes funding USDA-RD multifamily programs at the following levels for FY 2012:

Rural Rental Assistance Proposed by the Senate for FY 2012: $905 million
- Rural Rental Assistance Proposed by the House for FY 2012: $883 million
- FY 2012 Budget Request: $907 million
- FY 2011 Appropriation: $956 million
Section 515 Housing Direct Loans Proposed by the Senate for FY 2012: $64.5 million
- Section 515 Housing Direct Loans Proposed by the House for FY 2012: $58.1 million
- FY 2012 Budget Request: $95 million
- FY 2011 Appropriation: $69.5 million
Section 538 Housing Loan Guarantees Proposed by the Senate for FY 2012: $130 million
- Section 538 Housing Loan Guarantees Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans
Multifamily Housing Revitalization Program Proposed by the Senate for FY 2012: $13 million; $11 million for vouchers and $2 million for the demonstration program
- Multifamily Housing Revitalization Program Proposed by the House for FY 2012: $10.9 million for housing vouchers
- FY 2012 Budget Request: $16 million for housing vouchers
- FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

H.R. 2112-Next Steps

H.R. 2112 will go to a conference to iron out discrepancies between the House and Senate proposals before both chambers of Congress consider the final legislation. NAHMA will continue to work with Congress to ensure multifamily housing programs receive adequate funding in FY 2012. In the meantime, we encourage our members to contact their Representatives, request to speak with their staffer that handles appropriations issues, and urge them to pass a FY 2012 Agriculture, T-HUD, and CJS Appropriations bill OR Continuing Resolution that contains:

Full 12-month funding for:
- Section 202 and 811 PRACS;
- Tenant-based Section 8;
- Project-based Section 8; and
- Rural rental assistance contracts;
Increased funding for:
- HOME;
- CDBG;
- Section 515;
- The Rural Multifamily Housing Revitalization Program; and
- Capital advances for new construction of Section 202 and 811 units;
- Continued funding for the Section 538 program;
An extension of the M2M mortgage restructuring program through September 30, 2015; and
Continued funding for limited English proficiency (LEP) technical assistance; and
Does not eliminate the required October 1 publication date of HUD FMRs from statute.

For detailed talking points on these issues to discuss with or send to your Representatives or their staff, please visit: http://www.nahma.org/Leg%20area/NAHMA%20FY%202012%20THUD%20Approps%20Talking%20Points.pdf

Please visit NAHMA’s Grassroots website for information on contacting your Representatives: http://www.nahma.org/content/grassroots.html

HFSC Oversight Hearing on Fraud in the HOME Program

On Wednesday, the House Financial Services Insurance, Housing and Community Opportunity and Oversight and Investigations Subcommittees held a joint hearing on ``Fraud in the HUD HOME Program.'' Testimony was offered by individuals convicted of fraud, HUD officials, and industry colleagues.

At the beginning of the hearing, Insurance, Housing and Community Opportunity Chairwoman Judy Biggert (R-IL) entered an industry letter in support of the HOME program, signed by NAHMA, for the record. A copy of that letter may be found here: http://www.nahma.org/Leg%20area/HOME%20Sign-On%20Letter_11%2001%2011.pdf

The individuals convicted of defrauding the Federal Government both stated that the lack of monitoring and oversight from local HOME grant dispersement entities and lack of oversight and/or capacity to complete projects at the non-profits encouraged them to defraud housing programs. Both individuals acknowledged that they knew what they were doing was wrong but continued to embezzle funds.

HUD officials and industry colleagues all stated their support for the HOME program. They believed that the majority of HOME participants are honest, trustworthy, and do good work. They also did not believe that funding for the HOME program should be cut.

John McCarty, the Acting Deputy Inspector General for HUD suggested creating third party independent monitors for the HOME program, which would be paid for through administrative fees or incorporated into the project underwriting or operating costs. This would end the self-reporting by grantees and sub-grantees. He also recommended updating the reporting system and banning “bad actors” from future participation in Federal government programs.

Ken Donohue, the former Inspector General of HUD, agreed with the three-step oversight process that Chairwoman Biggert proposed during the June 3, 2011 HOME hearing. Specifically, Donohue endorsed future contracts requiring repayment for failed projects or misspent funds, legally pursuing those who defraud the government, and tightening the developer eligibility requirements.

James Beaudette, the Deputy Director of HUD’s Departmental Enforcement Center, said that HUD is currently attempting to improve oversight and enforce repayments. He also stated that HUD will continue to pursue debarment and other remedies for violators of HOME program compliance requirements.

Ethan Handelman, the Vice President for Policy and Advocacy for the National Housing Conference, testified in support of the HOME program, saying it creates affordable housing, generates employment opportunities, leverages private capital to build affordable housing, and helps create housing during economic downturns.

For more information on this hearing, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=266369

HFSC Hearing on the Private Mortgage Market Investment Act

On Thursday, the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing on draft legislation titled “Private Mortgage Market Investment Act,” which is intended to increase private investment in the mortgage market.

For more information on this hearing, including a copy of the draft bill, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=266666

HFSC Hearing on HUD’s RAD Proposal

On Thursday, the House Financial Services Insurance, Housing and Community Opportunity Subcommittee held a hearing on draft legislation for HUD’s Rental Assistance Demonstration (RAD) Proposal. During the hearing, all panelists supported the passage of the August 2011 RAD draft legislation.

The draft legislation for the RAD proposal was released in August 2011. The legislation would allow HUD to create a conversion demonstration program to allow Public Housing and Mod-Rehab properties to convert to project-based Section 8 contracts under the Multifamily Assisted Housing Reform and Affordability Act Of 1997 (MAHRA). The converted contracts would be administered by the Office of Affordable Housing Preservation.

Under the draft language, Conversions would be done through a competitive application process as determined by HUD. Public Housing and Mod-Rehab properties that convert would be required to offer resident mobility through housing choice vouchers to at least 90 percent of the converted units. HUD would be responsible for the development and creation of the resident mobility options and policies. HUD would be required to offer the RAD program selection criteria and procedures for public comment.

Finally, the legislation includes a provision that would allow HUD, at the request of RAP and Rent Supp property owners, to convert RAP and Rent Supp properties to project-based Section 8 contracts under MAHRA.

HUD’s Assistant Secretary of Public and Indian Housing, Sandra Henriquez, said that HUD also supported the language in H.R. 2112—the Senate’s minibus for the Agriculture, Commerce, Science and Justice, and Transportation-HUD FY 2012 appropriations bills—that would allow HUD to pursue RAD for public housing ONLY as an initial test of the proposal. Henriquez also said HUD was working with Congressional appropriators on including language in the minibus that would allow HUD to project-base some tenant protection vouchers, under the project-based voucher authority, to be used as a no cost strategy to help preserve Rent Supp and RAP properties. However, HUD does not believe the tenant protection vouchers offer a long-term solution to preserving the orphan program properties and continues to support statutory changes to allow RAP and Rent Supp properties to convert to long-term project-based Section 8 contracts.

Ismael Guerrero, the Executive Director of the Denver Housing Authority, testified on behalf of the Council of Large Public Housing Authorities. Guerrero urged the Subcommittee to ensure RAD allows to public housing to convert to long-term project-based Section 8 contracts without new rules or regulations that could result in confusion and regulatory conflict.

For more information on this hearing, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=266667

October 28, 2011

Joint Select Committee on Deficit Reduction Update

This week, both the Republican and Democratic members of the Joint Select Committee on Deficit Reduction have offered general proposals for how the Committee could reduce government spending.

The Democrats suggested a proposal that would cut discretionary spending and increase government revenues for a savings of $3 trillion over 10 years to the federal government. The plan is based loosely on the proposal put forward by the Senate Gang of Six earlier this summer. However, Republican Committee members adamantly oppose increasing taxes in their effort to reduce government spending.

The Republicans have countered with pure spending cuts and increases in government fees that would save the government $2.2 trillion over 10 years. The proposal would not increase tax revenue. No other details on the Democrat or Republican plans have been circulated at this time.

Earlier this week, NAHMA staff spoke with Committee Members’ staff on the progress of its deficit reduction proposals. Staff informed us that the Committee’s deficit reduction proposals will deal, for the most part, with top-line spending numbers rather than dealing with program specifics. The Committee does not believe its role is to make specific recommendations regarding discretionary spending.

The Committee only has a few days left to give its proposals to the Congressional Budget Office (CBO) to score the savings. The Deficit Committee must recommend at least $1.2 trillion in deficit-reduction ideas to Congress by November 23. If that level of savings is not approved by December 23, automatic, across-the-board cuts will be triggered. NAHMA will keep members informed as more information becomes available.

JSC Recommendations for Housing

Pursuant to P.L. 112-25 (S. 365), the Budget Control Act, all Congressional Committees were to submit their government spending reduction recommendation to the Joint Select Committee on Deficit Reduction by October 14.
The House Financial Services Committee (HFSC) Republicans, in regards to multifamily housing, recommended:

Increasing Fannie Mae and Freddie Mac guarantee fees;
Reforming the National Flood Insurance program;
Eliminating the HOPE VI and Choice Neighborhoods programs;
Reducing the CDBG program;
Eliminating the Brownsfield Economic Development Initiative;
Eliminating the Rural Housing and Economic Development program at HUD;
Eliminating the Neighborhood Stabilization program;
Not providing funding for Obama’s new Project Rebuild;
Eliminating the FHA Refinance program; and
Eliminating the Sustainable Communities program.

A copy of the HFSC Republicans letter may be found here: http://financialservices.house.gov/UploadedFiles/Lt12.pdf
The HFSC Democrats, in regards to multifamily housing, recommended:

Increasing Fannie Mae and Freddie Mac guarantee fees;
Reforming the National Flood Insurance program; and
Allowing Ginnie Mae to securitized FHA-HFA risk share loans;

A copy of the HFSC Democrats letter may be found here: http://www.democraticleader.gov/pdf/FinancialServices101311.pdf
The House Appropriations Democrats, in regards to multifamily housing, warned that cutting funding across-the-board would result in 173,000 households losing their rental assistance and, in turn, a safe place to live. These cuts would also result in the loss of incomes to property owners at the local level. A copy of the House Appropriations Committee Democrats letter may be found here: http://www.democraticleader.gov/pdf/Appropriations101311.pdf
Hearings

On Wednesday, the Congressional Joint Select Committee on Deficit Reduction convened its third public hearing to discuss non-security, discretionary spending. The Committee heard testimony from CBO Director Douglas Elmendorf, who discussed budgetary concepts and explained general trends in discretionary spending. He did not discuss specific Federal government programs. Elmendorf also warned the Committee that its decisions on discretionary spending could be voided by future Congresses, and highlighted the savings already wrung from discretionary outlays.

“Lawmakers have already taken significant steps to constrain discretionary spending,” Elmendorf said, noting that total discretionary funding in 2011 was lower than it had been since 2002 because of cuts already made to the discretionary budget.
More information on that hearing may be found here: http://www.deficitreduction.gov/public/index.cfm/hearings?ID=f481471f-9f2c-40fe-be8b-9baf8d815aba

FY 2012 Appropriations

This week, House Republican leadership confirmed the chamber will try to pass three to four small bundles of the 12 FY 2012 Appropriations bills over the next few weeks. It appears the House may take up H.R. 2112—the minibus containing the Agriculture, T-HUD, Commerce, Justice, and Science FY 2012 Appropriations Bills—if the Senate approves the legislation next week. The Senate is expected to wrap up action on H.R. 2112 on November 1.

However, it remains uncertain if Congress will be able to pass the minibuses, including H.R. 2112, by the end of the current continuing resolution, which is November 18. NAHMA will keep our members up to date as more information becomes available.

Coburn Amendment 800 to H.R. 2112

On Tuesday Nov. 1, the Senate will vote on Amendment 800, offered by Senator Tom Coburn (R-OK), to H.R. 2112. The Amendment would reduce USDA-Rural Development (RD) funding across-the-board by $1 billion (40 percent of the account), to be divided proportionally. Amendment 800 would devastate funding for rural new construction and rehabilitation programs and result in the loss of rental assistance to several low-income, rural households.

NAHMA strongly opposes this amendment and urges our members to contact their Senators, request to speak with the staff member that handles appropriations, and ask them to oppose Coburn’s Amendment No. 800 to H.R. 2112.

Coburn Amendment 792 to H.R. 2112

Last week, the Senate voted down Coburn Amendment 792 to H.R. 2112 by one vote. The Amendment needed 60 votes for adoption to H.R. 2112. Amendment 792 would have denied payments to persons or entities that received HUD payments for properties assisted or insured by HUD if the property:

Was designated as “troubled” in HUD’s Online Property Integrated Information System [which HUD calls the Online Property Integrated Information Suite] for “life threatening conditions” or “poor” physical condition; and
Has been on the OPIIS "troubled" properties list for “life threatening conditions” or “poor” physical condition at least one other time during the past five years.

The vote on this Amendment has demonstrated the need for NAHMA members to contact their Senators and educate them on the impact of poorly drafted legislation on affordable housing. As a result, NAHMA members have requested the vote list on this Amendment from Sen. Coburn. The breakdown of the vote on Amendment 792 may be found here: http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=1&vote=00184

NAHMA urges our members to contact their Senators, especially Senators that voted in favor of Amendment 792, and speak to their appropriations and/or housing staffer about the importance of maintaining funding and payments for affordable housing. Please encourage the staff and your Senator to use you as a resource on affordable housing issues.

For information on contacting your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you have any questions or require any talking points and Amendment 792, please contact Lauren Eardensohn (lauren.eardensohn@nahma.org).

Bipartisan Policy Center Launches Housing Commission

This week, the Bipartisan Policy Center (BPC) launched a commission to formulate bipartisan solutions to the housing crisis that it will offer to Congress and the Obama Administration. The group is lead by former Sen. Kit Bond, former HUD Secretaries Mel Martinez and Henry Cisneros, and BPC co-founder, former Senate Majority Leader George Mitchell.

The group plans to address the proper role for the government in the mortgage market, how to better balance HUD’s budget, and reducing homelessness.

For more information on the Commission, please visit: http://www.bipartisanpolicy.org/projects/housing

GSE and Housing Market Reform Update

Yesterday, Rep. Scott Garrett (R-NJ), Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, unveiled a proposal to reform the secondary mortgage market to become a purely private housing market without a government guarantee.

NAHMA is currently reviewing the legislation. For more information on the draft bill, please visit: http://garrett.house.gov/News/DocumentSingle.aspx?DocumentID=266462

H.R. 3254: Affordable Communities Employment Act of 2011

This week, Rep. Nydia Velázquez (D-NY) introduced legislation that would require recipients of HUD funds and their contractors and subcontractors to give priority to low- and very low-income persons for training and employment opportunities, particularly those who are recipients of government assistance for housing. In addition, HUD may give funding priority to grant recipients that will offer employment opportunities to low and very low-income individuals.

NAHMA is currently reviewing the legislation in conjunction with our Federal Affairs Committee. The legislation has been referred to the House Financial Services Committee.

NYT Editorial “A Foolish Time to Cut Housing Aid”

On Tuesday, the New York Times published an editorial titled “A Foolish Time to Cut Housing Aid.” The editorial focused on the need to provide continued funding for HUD programs in order to protect vulnerable populations—such as the elderly, poor, and disabled—from becoming homeless.

A copy of the editorial may be found here: http://www.nytimes.com/2011/10/26/opinion/a-foolish-time-to-cut-housing-aid.html?_r=2&scp=2&sq=housing&st=cse

October 21, 2011

H.R. 2112: FY 2012 Agriculture, T-HUD, and Commerce, Justice, and Science Appropriations Act

This week, the Senate began consideration of the first of three “minibus” bills to move FY 2012 Appropriations forward. The minibus H.R. 2112 contains the FY 2012 Agriculture, Transportation-HUD, and Commerce, Justice, and Science (CJS) Appropriations Acts. Although the Senate held a number of votes on key amendments, it adjourned for a week recess period last night. The Senate plans to reconvene and finish consideration of H.R. 2112 on Tuesday November 1.

H.R. 2112-Amendments

Senator Tom Coburn (R-KS) introduced three amendments to H.R. 2112 this week that would have negatively affected affordable housing providers and low-income tenants. Amendment 792 was not adopted, Amendment 795 was withdrawn, and Amendment 800 will be considered when the Senate reconvenes.

Coburn Amendment No. 792

Coburn Amendment No. 792 would have denied payments to persons or entities that received HUD payments for properties assisted or insured by HUD if the property:

Was designated as “troubled” in HUD’s Online Property Integrated Information System [which HUD calls the Online Property Integrated Information Suite] for “life threatening conditions” or “poor” physical condition; and
Has been on the OPIIS "troubled" properties list for “life threatening conditions” or “poor” physical condition at least one other time during the past five years.

The Amendment would have duplicated existing HUD mechanisms to address properties with life-threatening conditions or poor physical conditions. In fact, HUD already has a number of options to address properties determined to be in “poor” physical condition, which include, but are not limited to suspension or termination of housing assistance payments. It is important to note that in the Office of Housing’s Multifamily programs, all exigent health and safety hazards MUST be corrected within 72 hours of detection. Likewise, regulations are already in place which require HUD staff to refer properties with REAC physical inspection scores below 30 to the Departmental Enforcement Center.

Furthermore, many of the examples Senator Coburn offered in his floor statement to support Amendment 792 were either inapplicable or were already being addressed by HUD. For instance, the Senator cited abuses in public housing programs as arguments in favor of the amendment. OPIIS, however, is an internal HUD system for use by HUD staff to monitor multifamily properties regulated by the Office of Housing. It does not collect information about the physical condition of public housing.

Likewise, the Senator’s floor statement mentioned HUD paying rental assistance on behalf of deceased individuals. Assisted property owners and public housing agencies are required to use the Enterprise Income Verification (EIV) System as third party verification of resident’s income. EIV provides access to various interagency databases. Through EIV, owners, management agents and PHAs run “deceased tenant” reports, which checks information about recent deaths from the Social Security Administration against the names and social security numbers of the property’s residents. Use of EIV has been an effective tool to ensure that the proper subsidy is directed to qualified households and to ensure that subsidies are not paid on behalf of deceased tenants.

NAHMA opposed Coburn Amendment 792. While the Amendment did not pass, NAHMA is concerned that the Amendment came close to passage, receiving 59 votes of the 60 votes needed for passage.

Coburn Amendment No. 795

Coburn Amendment No. 795 would have rescinded funding from HUD projects, specifically projects that received HOME grants, which:

Began 5 of more years ago,
Are not complete,
Have not drawn on funds in the last 18 months;
Are vacant and have not been sold or leased; or
Have funds that have been obligated for more than 1 year.

Amendment No. 795 was withdrawn from consideration.

Coburn Amendment No. 800

Coburn Amendment No. 800 would reduce USDA-Rural Development (RD) funding across-the-board by $1 billion, to be divided proportionally. Senator Coburn believes RD programs duplicate other government programs and are not serving their intended purposes. This Amendment will be considered by the Senate on November 1.

H.R. 2112-HUD Funding

H.R. 2112 proposes funding HUD multifamily programs at the following levels for FY 2012:

Tenant-Based Section 8 Proposed by the Senate for FY 2012: $18.9 billion (total); $17.1 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $113 million for Section 811 vouchers.
- Tenant-Based Section 8 Proposed by the House for FY 2012: $18.5 billion (total); $17 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $114 million for Section 811 vouchers.
- FY 2012 Budget Request: $19.2 billion (total); $17.1 billion (contract renewals) which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2011 Appropriation: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers.
Project-Based Section 8 Proposed by the Senate for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Project-Based Section 8 Proposed by the House for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2012 Budget Request: $9.4 billion total; $9.1 billion for contract renewals and $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Requested the authority to allow PBCAs to administer the following programs: Section 236(a) interest reduction; Rent Supp; Section 236(f); Section 202 and 811 PRACs; and Section 202 PRACs and loans.
- FY 2011 Appropriation: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
Section 202 Proposed by the Senate for FY 2012: $370 million; $269 for PRACs and capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- Section 202 Proposed by the House for FY 2012: $600 million; $395 million for PRACs and capital advances, $80 million for Service Coordinators, and $25 million for assisted living and services enriched conversions
- FY 2012 Budget Request: $757 million; $259 million for PRACs, $387 million for capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- FY 2011 Appropriation: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances
Section 811 Proposed by the Senate for FY 2012: $150 million for PRACS and new construction
- Section 811 Proposed by the House for FY 2012: $196 million for PRACS and new construction
- FY 2012 Budget Request: $196 million; $85 million to renew and amend operating subsidy contracts for existing Section 811 housing
- FY 2011 Appropriation: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts
Transforming Rental Assistance (TRA) Proposed by the Senate for FY 2012: $0
- Transforming Rental Assistance (TRA) Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $200 million
- FY 2011 Appropriation: $0
HOPE VI Proposed by the Senate for FY 2012: $0
- HOPE VI Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $100 million; Up to $65 million may be used for Choice Neighborhoods

Choice Neighborhoods Proposed by the Senate for FY 2012: $120 million
- Choice Neighborhoods Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $250 million
- FY 2011 Appropriation: Up to $65 million from the HOPE VI account
HOME Proposed by the Senate for FY 2012: $1 billion
- HOME Proposed by the House for FY 2012: $1.2 billion
- FY 2012 Budget Request: $1.65 billion
- FY 2011 Appropriation: $1.61 billion
CDBG Proposed by the Senate for FY 2012: $2.85 billion for grants
- CDBG Proposed by the House for FY 2012: $3.5 billion for grants
- FY 2012 Budget Request: $3.7 billion for grants
- FY 2011 Appropriation: $3.5 billion; $3.34 billion for grants
LEP Proposed by the Senate for FY 2012: $300,000
- LEP Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $500,000
Affordable Housing Trust Fund Proposed by the Senate for FY 2012: $0
- Affordable Housing Trust Fund Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $1 billion
- FY 2011 Appropriation: $0

H.R. 2112 includes an extension of the Mark-to-Market (M2M) program. NAHMA supports extending the M2M program through September 30, 2015.

H.R. 2112-USDA-RD Funding

H.R. 2112 proposes funding USDA-RD multifamily programs at the following levels for FY 2012:

Rural Rental Assistance Proposed by the Senate for FY 2012: $905 million
- Rural Rental Assistance Proposed by the House for FY 2012: $883 million
- FY 2012 Budget Request: $907 million
- FY 2011 Appropriation: $956 million
Section 515 Housing Direct Loans Proposed by the Senate for FY 2012: $64.5 million
- Section 515 Housing Direct Loans Proposed by the House for FY 2012: $58.1 million
- FY 2012 Budget Request: $95 million
- FY 2011 Appropriation: $69.5 million
Section 538 Housing Loan Guarantees Proposed by the Senate for FY 2012: $130 million
- Section 538 Housing Loan Guarantees Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans
Multifamily Housing Revitalization Program Proposed by the Senate for FY 2012: $13 million; $11 million for vouchers and $2 million for the demonstration program
- Multifamily Housing Revitalization Program Proposed by the House for FY 2012: $10.9 million for housing vouchers
- FY 2012 Budget Request: $16 million for housing vouchers
- FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

H.R. 2112-Next Steps

NAHMA will continue to work with Congress to ensure multifamily housing programs receive adequate funding in FY 2012. In the meantime, we encourage our members to contact their Senators, request to speak with their staffer that handles appropriations issues, and urge them to pass a FY 2012 Agriculture, T-HUD, and CJS Appropriations bill OR Continuing Resolution that contains:

Full 12-month funding for:
- Section 202 and 811 PRACS;
- Tenant-based Section 8;
- Project-based Section 8; and
- Rural rental assistance contracts;
Increased funding for:
- HOME;
- CDBG;
- Section 515;
- The Rural Multifamily Housing Revitalization Program; and
- Capital advances for new construction of Section 202 and 811 units;
Continued funding for the Section 538 program;
An extension of the M2M mortgage restructuring program through September 30, 2015; and
Continued funding for limited English proficiency (LEP) technical assistance; and
Does not eliminate the required October 1 publication date of HUD FMRs from statute.

For detailed talking points on these issues to discuss with or send to your Senators or their staff, please visit: http://www.nahma.org/Leg%20area/NAHMA%20FY%202012%20THUD%20Approps%20Talking%20Points.pdf

Please visit NAHMA’s Grassroots website for information on contacting your Senators: http://www.nahma.org/content/grassroots.html

Obama Nominates Galante for FHA Commissioner

This week, the White House announced that President Obama would formally nominate Carol Galante to serve as the Assistant Secretary for Housing and FHA Commissioner.

Galante currently serves as the Acting Assistant Secretary / FHA Commissioner and previously served at DAS of Multifamily Housing.

October 14, 2011

HFSC Hearing on Second Draft of SESA

This week, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee held a hearing regarding the second draft of the Section 8 Savings Act (SESA). The Subcommittee made substantial changes to the draft SESA bill, which has resulted in significant scaled-back support for the legislation from members of the affordable housing industry, including NAHMA. Now, the draft bill only provides streamlined inspections and simplified rent calculations and income reviews to PHAs participating in a new self-sufficiency and rental assistance counseling demonstration program. Private owners would not be eligible for the streamlined inspections and simplified rent calculations and income reviews within this draft.

NAHMA submitted written testimony for the record. While we strongly support the inspection reforms and simplified rent calculations and income reviews on their own merits, we oppose making them conditional on a PHA’s decision to participate in a self-sufficiency and rental assistance counseling support program. NAHMA feels limiting the benefits of streamlined inspections and simplified rent calculations and income reviews inadvertently penalizes owners and voucher holders in jurisdiction of a PHA that cannot or will not participate in the self-sufficiency demonstration program. Therefore, we requested that the Subcommittee remove conditional applicability of the inspection reforms and simplified rent calculations and income reviews from SESA.

NAHMA continues to support the inclusion of limited English proficiency authorization language, changes to the fair market rents that maintain the October 1 publication date, and the extension of the Mark-to-Market program.

A copy of the testimony may be found here: http://www.nahma.org/Leg%20area/SESA%20Testimony%20October%202011%20House.pdf

A number of affordable housing industry groups, including NAHMA, also sent a letter to Subcommittee Chairwoman Judy Biggert (R-IL), which echoed the concerns about the draft legislation brought up by NAHMA’s written testimony. A copy of the letter may be found here: http://www.nahma.org/Leg%20area/2011%2013%20October%20Coalition%20Letter%20to%20HFSC%20re%20SESA.pdf

The majority of the testimony given by PHAs and their partners described the self-sufficiency programs and activities the groups had promoted and participated in at the local level, including work requirements and the Moving to Work program.
Only Will Fischer, the Senior Policy Analyst for the Center on Budget and Policy Priorities, and Greg Russ, the Executive Director and COO of the Cambridge Housing Authority in Massachusetts, commented on the second draft of the SESA bill.

Fischer called for major improvements for SESA’s self-sufficiency provisions. He was specifically concerned that the legislation tied streamlined inspections and rent reforms to the proposed self-sufficiency and rental assistance counseling demonstration program. Fischer explained that most PHAs need the administrative savings from the benefits provided by SESA to make ends meet, considering the sharp decreases in administrative funding Congress has appropriated for the public housing program. He also stated the self-sufficiency demonstration program would deny the private owners of project-based Section 8 properties substantial administrative savings, reducing the impact of savings generated by the bill. Fisher said the rent and inspection improvements of SESA should apply to all PHAs and private owners and that Committee should look for other incentives for PHAs to participate in the self-sufficiency demonstration.

Russ believed that the streamlined inspection requirements, rent reforms, and family self-sufficiency components of SESA were a step in the right direction. However, he believed additional flexibility was needed in SESA to meet the needs of local PHAs to promote resident self-sufficiency, considering the limited resources available to PHAs to run these programs.

More information on the hearing, including witness testimonies and an archived webcast, may be found here: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=263465

Industry Letter Opposing HUD Notice H 2011-20 Bed Bug Guidance

On Tuesday, a coalition of eight national housing organizations, which was spearheaded by NAHMA, sent a letter to Acting FHA Commissioner and Housing Assistant Secretary Carol Galante opposing Notice H 2011-20 “Guidelines on Bed Bug Control and Prevention in HUD Insured and Assisted Multifamily Housing.”

The housing organizations felt that guidance, although well intentioned, prescribed a seriously flawed approach to dealing with bed bug problems in multifamily properties. In fact, the industry members believed that the Notice, as written, may worsen bed bug problems by limiting owners’ options to prevent infestations and failing to provide property staff with sufficient leverage to ensure resident cooperation with treatment protocols. Furthermore, the industry groups felt that the guidance imposed substantial costs on properties without identifying offsets or sufficiently describing how HUD will evaluate expenses associated with bed bug infestations. Because the Notice applies to all HUD/FHA insured properties, the housing organizations also had questions about the contract obligations for existing mortgage borrowers and proper disclosure to pending and future FHA multifamily applicants for HUD mortgage insurance.

The letter recommended that HUD rescind Notice H-2011-20 until such time that the Department has had an opportunity to work with multifamily industry stakeholders and approach the issue from a broader and more comprehensive manner.

A copy of the letter may be found here: http://www.nahma.org/Leg%20area/Industry%20Response%20to%20HUD%20bed%20bug%20notice%20H%202011%2020%20FINAL.pdf

October 7, 2011

H.R. 2608: Continuing Resolution, FY 2012

On Tuesday, the House passed H.R. 2608, a continuing resolution providing funding for all government programs at FY 2011 levels through November 18. The bill has already passed the Senate. It was signed into law by President Obama as P.L. 112-36 on Tuesday, October 4.

The bill provided up to $25 billion for HUD’s FHA General and Special Risk Insurance Funds for FY 2012. The bill contained no other provisions related to Federal multifamily housing programs.

Congress has not approved even one of the twelve appropriations bills by the start of FY 2012, October 1. This CR gives Congress additional time to complete the twelve appropriations bills, including the FY 2012 Transportation-HUD appropriations legislation. House Republican leadership does not support completing the FY 2012 appropriations process in a large omnibus appropriations bill, as has been done in the past.

NAHMA will continue to work with Congress to ensure adequate funding is provided for all multifamily rental housing programs in the final appropriations legislation, as well as an extension for the Mark-to-Market program through October 1, 2015.

HFSC Hearing on “The Obama Administration’s Response to the Housing Crisis”

Yesterday, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee held a hearing on the Obama Administration’s response to the housing crisis. Testimony was offered by USDA’s Rural Development (RD) Administrator Tammye Trevino, HUD’s Acting FHA Commissioner Carol Galante, Treasury’s Deputy Chief of the Homeownership Preservation Office Darius Kingsley, industry experts, and academics.

The majority of the hearing focused on single-family housing and economic development issues. However, Trevino and Galante did discuss multifamily housing’s role in the housing market.

RD Administrator Trevino discussed how RHS’s multifamily housing programs have created more than 9,300 units through over the last few years the Section 515 and 538 programs for families living in rural areas. In addition, she mentioned how RHS’s Multifamily Preservation and Revitalization Demonstration Program had renovated 28,700 units over the last few years to preserve existing affordable rental units. In FY 2009 and FY 2010, the USDA investment of $648.8 million was able to leverage an additional $1.74 billion in third-party investments for rental housing in rural America. Trevino also mentioned that the rural rental assistance program has been able to assist over 270,000 households in the last few years, allowing them to live in rental apartments of their own.

Trevino also discussed the White House’s Rental Policy Working Group (RPWG), where USDA, HUD, Treasury, OMB, and industry stakeholders were working to identify administrative changes that could improve overall programmatic efficiency of Federal rental housing programs and enhance the ability of communities to create and preserve affordable housing. She highlighted a Memorandum of Understanding (MOU) USDA, HUD and the Michigan State Housing Development Authority (MHSDA) signed last month in an effort coordinate subsidy-layering reviews (SLR) for rental housing developments funded by more than one source in Michigan. This MOU is the first implementation of the RPWG’s recommendation to reduce and improve SLRs.

Although Acting FHA Commissioner Galante’s testimony focused on single-family housing, she did reaffirm HUD’s commitment to ensuring affordable rental housing is part of any housing finance market reform discussion.

H.R. 3076: Amending the LIHTC Student Rule to Include Formerly Homeless Youth

This week, Rep. Jim McDermott (D-WA) introduced legislation that would provide an exemption for formerly homeless youth in the LIHTC student rule.

NAHMA is currently reaching out to Members of Congress to gauge interest in a broader, single student rule that would apply across all federally assisted housing programs in order to ensure those that need affordable housing are eligible.

The bill has been referred to the House Ways and Means Committee.

September 30, 2011

H.R. 2017: Continuing Resolution, FY 2012

Yesterday, the House approved H.R. 2017 through a unanimous consent measure. H.R. 2017 is a continuing resolution (CR) that provides funding for all federal government programs at FY 2011 levels, unless otherwise specified, through October 4. The bill includes $2.5 billion in disaster aid funding and gives Congress additional time to approve a longer CR, H.R. 2608, which would fund government programs at FY 2011 levels through November 18.

Both H.R. 2017 and H.R. 2608 extend the National Flood Insurance through their respective end dates.
Congress has not approved even one of the twelve appropriations bills by the start of FY 2012, which is tomorrow, October 1. The CR through November 18, as proposed by H.R. 2608, would give Congress additional time to complete the twelve appropriations bills, including the FY 2012 Transportation-HUD appropriations legislation.

S. 1617: Healthy Housing Council Act

Last week, Sen. Jack Reed (D-RI) introduced S. 1617, a bill which would create an interagency council on Healthy Homes. Members would include the heads of Health and Human Services, HUD, the Environmental Protection Agency, Energy, Labor, Veterans Affairs, IRS/Treasury, Agriculture, and Education.
The Council is intended to:

Promote the supply and demand for healthy housing;
Coordinate actions to improve access to healthy housing and efficiency between the agencies;
Identify program deficiencies and best practices; and
Improve the quality of housing available.

This bill has been referred to the Senate Banking Committee. NAHMA has decided to remain neutral on this legislation due to concerns of the possibilities of unfunded mandates that may result from the Council’s recommendations.

S. 1621: Livable Communities Act

Last week, Sen. Bob Menendez (D-NJ) introduced S. 1621, the Livable Communities Act. The bill would establish: the Office of Sustainable Housing and Communities; the Interagency Council on Sustainable Communities; a comprehensive planning grant program; and a sustainability challenge grant program.

The legislation has been referred to the Senate Banking Committee. NAHMA is neutral on this legislation.

H.R. 3030: Housing Opportunities Made Equal Act of 2011

Last week, Rep. Jerry Nadler (D-NY) introduced H.R. 3030, the Housing Opportunities Made Equal (HOME) Act of 2011. The legislation would amend the Fair Housing Act to prohibit discrimination on the basis of sexual orientation, gender identity, and guardian and dependent status, including foster children.

The bill has been referred to the House Judiciary Committee and House Financial Services Committee.

September 23, 2011

H.J. Res. 79: Continuing Resolution

This morning, the House passed H.J. Res. 79, a continuing resolution (CR) making appropriations for government programs at FY 2011 levels through November 18.

However, the Senate voted down the CR this afternoon. Both House and Senate Democrats oppose the CR because they felt it should have included more money for disaster assistance. The CR contained over $3 billion in additional disaster assistance appropriations for areas hit by recent hurricanes, tornadoes, and floods.

The CR, as drafted by the House, included offsets for disaster assistance, including spending cuts to a loan program that supports the production of energy-efficient cars and a $100 million cut to the stimulus loan program that funded the bankrupt solar panel manufacturer Solyndra.

The CR, as drafted by the House, did not make any changes to funding for multifamily rental housing programs. However, despite requests from HUD and industry member, the CR did not contain an extension for the Mark-to-Market (M2M) program. HUD’s authority to restructure mortgages through M2M expires on September 30.

NAHMA is working to include the M2M extension through September 30, 2015 in the first available, moving vehicle. Currently, the House Financial Services Committee Republicans have included the extension in the draft Section 8 Savings Act (SESA). The M2M extension was not included in the draft House FY 2012 Transportation-HUD appropriations bill. However, the M2M extension was including in the Senate Appropriations’ Committee FY 2012 T-HUD bill, which passed the Committee on Wednesday.

It does not appear likely that the government will shut down on October 1; nevertheless, House and Senate leadership will continue to negotiate the disaster assistance funding issue over the weekend.

S. 1596: FY 2012 T-HUD Appropriations Bill

On Wednesday, the Senate Appropriations Committee approved legislation, S. 1596, to fund transportation and housing programs in FY 2012. While the Committee provided full-funding for the Section 202 and 811 PRACs, tenant-based Section 8, and project-based Section 8 contracts, the HOME and CDBG accounts received serious cuts. The Senate legislation also reduces the funding available for 202 and 811 capital advances.

The Senate Appropriations Committee approved FY 2012 funding levels for multifamily housing programs as follows:

Tenant-Based Section 8 Proposed by the Senate for FY 2012: $18.9 billion (total); $17.1 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $113 million for Section 811 vouchers.
- Tenant-Based Section 8 Proposed by the House for FY 2012: $18.5 billion (total); $17 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013 and $114 million for Section 811 vouchers.
- FY 2012 Budget Request: $19.2 billion (total); $17.1 billion (contract renewals) which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2011 Appropriation: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers.
Project-Based Section 8 Proposed by the Senate for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Project-Based Section 8 Proposed by the House for FY 2012: $9.4 billion total; $9.1 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2012 Budget Request: $9.4 billion total; $9.1 billion for contract renewals and $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- Requested the authority to allow PBCAs to administer the following programs: Section 236(a) interest reduction; Rent Supp; Section 236(f); Section 202 and 811 PRACs; and Section 202 PRACs and loans.
- FY 2011 Appropriation: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
Section 202 Proposed by the Senate for FY 2012: $370 million; $269 for PRACs and capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- Section 202 Proposed by the House for FY 2012: $600 million; $395 million for PRACs and capital advances, $80 million for Service Coordinators, and $25 million for assisted living and services enriched conversions
- FY 2012 Budget Request: $757 million; $259 million for PRACs, $387 million for capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- FY 2011 Appropriation: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances
Section 811 Proposed by the Senate for FY 2012: $150 million for PRACS and new construction
- Section 811 Proposed by the House for FY 2012: $196 million for PRACS and new construction
- FY 2012 Budget Request: $196 million; $85 million to renew and amend operating subsidy contracts for existing Section 811 housing
- FY 2011 Appropriation: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts
Transforming Rental Assistance (TRA) Proposed by the Senate for FY 2012: $0
- Transforming Rental Assistance (TRA) Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $200 million
- FY 2011 Appropriation: $0
HOPE VI Proposed by the Senate for FY 2012: $0
- HOPE VI Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $100 million; Up to $65 million may be used for Choice Neighborhoods

Choice Neighborhoods Proposed by the Senate for FY 2012: $120 million
- Choice Neighborhoods Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $250 million
- FY 2011 Appropriation: Up to $65 million from the HOPE VI account
HOME Proposed by the Senate for FY 2012: $1 billion
- HOME Proposed by the House for FY 2012: $1.2 billion
- FY 2012 Budget Request: $1.65 billion
- FY 2011 Appropriation: $1.61 billion
CDBG Proposed by the Senate for FY 2012: $2.85 billion for grants
- CDBG Proposed by the House for FY 2012: $3.5 billion for grants
- FY 2012 Budget Request: $3.7 billion for grants
- FY 2011 Appropriation: $3.5 billion; $3.34 billion for grants
LEP Proposed by the Senate for FY 2012: $300,000
- LEP Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $500,000
Affordable Housing Trust Fund Proposed by the Senate for FY 2012: $0
- Affordable Housing Trust Fund Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $1 billion
- FY 2011 Appropriation: $0

S. 1596 did include an extension of the Mark-to-Market (M2M) program. NAHMA supports extending the M2M program through September 30, 2015.

However, the bill included provisions that would eliminate the requirement for the publication of fair market rents (FMR) by October 1. NAHMA opposes removing a FMR publication date from the statute.

NAHMA will continue to work with the House and Senate to ensure multifamily housing programs receive adequate funding in FY 2012.

We urge our members to contact their representatives and let them know you support:

Full funding for Section 202 and 811 PRACS, tenant-based Section 8, and project-based Section 8 12-month rental assistance contracts;
Continued capital advances for new construction of Section 202 and 811 units;
At least $1.5 billion for HOME;
An extension of the M2M program through September 30, 2015; and
Continued funding for LEP technical assistance; and
- A requirement that HUD report options and costs for a public oral translation hotline for LEP households interested in or residing in HUD subsidized housing to appropriators within 90 days of the FY 2012 Transportation-HUD Appropriations bill’s passage.

Please also let your Representatives know that you oppose the elimination of the October 1 publication date of HUD FMRs.

Please visit NAHMA’s Grassroots website for information on contacting your Representatives: http://www.nahma.org/content/grassroots.html

Obama Deficit Reduction Proposals

On Monday, President Obama made several recommendations for reducing government spending by up to $3 trillion over the next decade, in addition to the $1.2 trillion in discretionary spending cuts that has already been authorized by S. 627, the Budget Control Act. The plan includes the proposed pay-fors for the President’s American Jobs Act. The $3 trillion in deficit reduction outside of discretionary spending cuts would be made up of:

$1.5 trillion in tax reforms;
$580 billion in “cuts and reforms across all mandatory programs;”
$430 billion from interest savings;
$1.1 trillion from the drawdown of troops in Afghanistan, the changed mission in Iraq; and
Caps to limit spending on future overseas contingency operations.

NAHMA was pleased to see that the Administration wisely kept the elimination of the low-income housing tax credit (LIHTC) out of the President’s suggestions for reforming corporate tax breaks. HUD and Treasury officials strongly support the program and view it as one of the few, successful options available for the new construction and rehabilitation of existing affordable housing units. NAHMA opposes any Congressional effort to eliminate the program.

However, industry members are particularly concerned to see the return of the “carried interest” proposal in Obama’s deficit reduction plan. It was floated by the Administration and several key Democrats last year. The proposal would increase the tax on “carried interest,” or the profits gained during a sale of assets, for the general partners of entrepreneurial enterprises. The proposal would require “carried interest” to be taxed as regular income instead of capital gains, a substantial tax increase. The “carried interest” proposal is directed at hedge fund and other financial managers. Under this definition, however, managing general partners of multifamily housing development deals would also be subject to higher tax rates on profits from a property sale. NAHMA opposes this proposal because it creates a disincentive for developers and investors to become the managing general partner in multifamily housing development deals. This would lead to the completion of fewer real estate deals, the loss of jobs, increases in the cost of new developments, and a reduction of housing supply by making many deals financially unworkable.

Also of interest to NAHMA members, the Obama Administration’s deficit reduction plan would increase fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee repayment of new mortgage loans. We are seeking additional information on whether or not this proposal would apply to multifamily loans.

Congressional Republican leadership has come out against the Administration’s deficit reduction proposals, calling them “one-sided” and “class warfare.” President Obama has warned Congress that he will veto any deficit reduction plan sent to him by Congress that wasn't 'balanced' between taxes and spending cuts, because spending cuts alone would hurt America’s most vulnerable.

Industry Comments on Proposed FY 2012 FMRs

This week, some affordable housing industry groups, including NAHMA, sent joint industry comments to HUD on the proposed FY 2012 fair market rents (FMR). We are particularly concerned with the FMR methodology, which had yielded large changes in the FMRs of some localities. The industry has recommended that HUD adopt a policy to limit decreases in FMRs for FY2012 to five percent in order to limit the burden on the PHAs and property owners who administer the program.

The letter also strongly supported HUD’s proposal to formalize a publication date for income limits and recommend that HUD establish a publication date of October 1 for income limits. We also reaffirmed the need for the October 1 FMR publication deadline as well.

A copy of the comments may be found here: http://www.nahma.org/member/New%20HUD%20Docs/Final%20Industry%20Comments%20Proposed%20FY12%20FMRs.pdf

A copy of the Federal Register Notice with the proposed FY 2012 FMRs may be found here: http://www.gpo.gov/fdsys/pkg/FR-2011-08-19/pdf/2011-20932.pdf

September 16, 2011

H.J. Res. 79: Continuing Resolution

This week, the House Appropriations Committee released H.J. Res. 79, a continuing resolution (CR) making appropriations for government programs at FY 2011 levels through November 18.

The CR did not make any changes to funding for multifamily rental housing programs. However, despite requests from HUD and industry member, the CR did not contain an extension for the Mark-to-Market (M2M) program. HUD’s authority to restructure mortgages through M2M expires on September 30.

NAHMA is working to include the M2M extension through September 30, 2015 in the first available, moving vehicle. Currently, the House Financial Services Committee Republicans have included the extension in the draft Section 8 Savings Act (SESA). The M2M extension was not included in the draft House FY 2012 Transportation-HUD appropriations bill. We are working to get it included during the full House Appropriations Committee mark-up or in the Senate FY 2012 T-HUD bill, which will be marked-up next week.

The House expects to vote on the CR sometime next week.

A copy of the CR legislative text may be found here: http://www.rules.house.gov/Media/file/PDF_112_1/Floor_Text/FY12CR%20FY11914.pdf

President Obama’s American Jobs Act

Last week, President Obama proposed a $447 billion job creation bill before a joint session of Congress, called the American Jobs Act, which would cut taxes and increase federal spending in American infrastructure and education. Details of the legislation were released this week.

The draft bill includes a $15 billion for the Project Rebuild program, modeled after the Neighborhood Stabilization Program, which would help rehabilitate vacant and foreclosed homes and businesses in order to increase construction jobs. Key components of the program include:

Focusing on distressed commercial properties and redevelopment to stabilize communities;
Including for-profit entities to gain expertise, leverage federal dollars and speed program implementation;
Increasing support for “land banking”; and
Creating jobs through maintaining properties and eliminating community blight.

More information about President Obama’s American Jobs Act may be found here: http://www.whitehouse.gov/jobsact

Joint Select Committee on Deficit Reduction

The Joint Select Committee on Deficit Reduction continued meeting this week to discuss deficit reduction options.

The Committee was created as part of the efforts to reduce the Federal deficit by S. 627, the Budget Control Act. The act raised the debt limit through 2012 and required $2.5 trillion in government spending cuts over the next decade. Under the act, the Committee is charged with identifying $1.5 trillion in deficit cuts over 10 years by November 23.

If the Committee fails to act by November 23 or Congress fails to approve the Committee’s recommendations by December 23, across the board cuts will be applied to domestic and defense spending starting in FY 2013. In the case of across-the-board cuts, Social Security and Medicaid would be exempt from the cuts, and Medicare would only face cuts to providers and insurers, not beneficiaries.

House and Senate leadership have selected 12 Members of Congress to participate in the Joint Select Committee on Deficit Reduction. They are as follows: Sens. Patty Murray (D-WA), Max Baucus (D-MT), John Kerry (D-MA), Jon Kyl (R-AZ), Pat Toomey (R-PA), and Rob Portman (R-OH); and Reps. Jim Clyburn (D-SC), Xavier Becerra (D-CA), Chris Van Hollen (D-MD), Jeb Hensarling (R-TX), Dave Camp (R-MI), and Fred Upton (R-MI).

If you reside in any of these Members states or districts, NAHMA strongly urges you to contact these Members offices and let them know you oppose cuts to affordable housing programs and the elimination of the LIHTC.

Please visit NAHMA’s Grassroots website for information on contacting your Representatives: http://www.nahma.org/content/grassroots.html

More information on the Committee and its recent meetings may be found here: http://deficitreduction.senate.gov/public/

New York Times Supports Passage of SESA

On Sunday, the New York Times (NYT) ran an editorial supporting the swift passage of the Section 8 Savings Act in Congress. The editorial noted the need for housing choice voucher reform, especially in light on the tight budget climate currently on the Hill.

The editorial also called Republicans’ push to place time limits on receiving rental assistance a mistake, since the majority of Section 8 recipients are from the most vulnerable populations: seniors, disabled, and those with children.

A copy of the NYT editorial, “Housing for the Truly Vulnerable” can be found here:
http://www.nytimes.com/2011/09/11/opinion/sunday/housing-for-the-truly-vulnerable.html?partner=rss&emc=rss

September 9, 2011

House Appropriations T-HUD Subcommittee Passes FY 2012 Bill

Yesterday, the House Appropriations Transportation-HUD (T-HUD) Subcommittee approved legislation to fund transportation and housing programs in FY 2012. While the Subcommittee provided full-funding for the Section 202 and 811 PRACs, tenant-based Section 8, and project-based Section 8 contracts, as well as increased funding for 202 and 811 capital advances and flat funding for CDBG, the HOME account received serious cuts.
The Subcommittee approved FY 2012 funding levels for multifamily housing programs as follows:

Tenant-Based Section 8: $18.5 billion (total); $17 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2012 Budget Request: $19.2 billion (total); $17.1 billion (contract renewals) which includes an advanced appropriation of $4 billion for FY 2013; and $114 million for Section 811 vouchers.
- FY 2011 Appropriation: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers.
Project-Based Section 8: $9.4 billion total; $8.95 billion (contract renewals); $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2012 Budget Request: $9.4 billion total; $9.1 billion for contract renewals and $289 million for contract administrators; $400 million as an FY 2013 Advanced Appropriation included in the total funding levels.
- FY 2011 Appropriation: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
Section 202: $600 million; $395 million for PRACs and capital advances, $80 million for Service Coordinators, and $25 million for assisted living and services enriched conversions
- PRACs are to remain available for FY 2025 for the liquidation of valid obligations incurred.
- FY 2012 Budget Request: $757 million; $259 million for PRACs, $387 million for capital advances, $91 million for Service Coordinators, and $20 million for assisted living and services enriched conversions
- FY 2011 Appropriation: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances
Section 811: $196 million for PRACS and new construction
- PRACs are to remain available for FY 2025 for the liquidation of valid obligations incurred.
- FY 2012 Budget Request: $196 million; $85 million to renew and amend operating subsidy contracts for existing Section 811 housing
- FY 2011 Appropriation: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts
Transforming Rental Assistance (TRA): $0
- FY 2012 Budget Request: $200 million
- FY 2011 Appropriation: $0
HOPE VI: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $100 million; Up to $65 million may be used for Choice Neighborhoods
Choice Neighborhoods: $0
- FY 2012 Budget Request: $250 million
- FY 2011 Appropriation: Up to $65 million from the HOPE VI account
HOME: $1.2 billion
- FY 2012 Budget Request: $1.65 billion
- FY 2011 Appropriation: $1.61 billion
CDBG: $3.5 billion for grants
- FY 2012 Budget Request: $3.7 billion for grants
- FY 2011 Appropriation: $3.5 billion; $3.34 billion for grants
LEP: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $500,000
Affordable Housing Trust Fund: $0
- FY 2012 Budget Request: $1 billion
- FY 2011 Appropriation: $0

The legislation did include general provisions to improve oversight and reduce waste, fraud, and abuse in block grant programs, like CDBG and HOME. The Office of Community Planning and Development (CPD) would be required to submit a study to Congress detailing problems with CPD programs identified by IG reports and the steps HUD has taken or will take to alleviate them. Within six months of the legislation’s passage, the GAO would be required to submit a report on waste, fraud, and abuse in these programs and provide recommendations to eliminate the problems.

The bill did not include an extension of the Mark-to-Market (M2M) program, nor did it include funding for the HOPE VI/Choice Neighborhood programs. NAHMA is still seeking legislative vehicles to extend M2M in the House and Senate.

A copy of the draft bill may be accessed here: http://appropriations.house.gov/UploadedFiles/12THUD_xml.pdf

The legislation will now go to the full Committee for mark-up. In related news, the Senate Appropriations Committee announced their FY 2012 budget authorities for the 12 appropriations accounts. The T-HUD account received $55.3 billion in budget authority for FY 2012, which is almost $200 million above the House proposed FY 2012 T-HUD appropriations and is $110 million below the FY 2011 appropriations levels.

NAHMA will continue to work with the House and Senate to ensure multifamily housing programs receive adequate funding in FY 2012.

However, because the appropriations process started so late in both the House and the Senate, it is highly unlikely that any of the 12 appropriations bills will be passed by the September 30th deadline. The House Republicans announced that the House will consider a month long continuing resolution the week of September 19, which will fund all government programs at FY 2011 levels for a one to two month period while Congress continues to work towards the passage of the 12 appropriations bills.

NAHMA is preparing FY 2012 appropriations talking points for our members so they can discuss their concerns over FY 2012 multifamily housing funding with their Congressional Representatives. NAHMA will email members a link to the talking points when they are posted.

Please visit NAHMA’s Grassroots website for information on contacting your Representatives: http://www.nahma.org/content/grassroots.html

H.R. 2112: FY 2012 Agriculture Appropriations

This week, the Senate Appropriations Committee passed their version of the H.R. 2121, the FY 2012 Agricultural Appropriations Act. The Senate’s version of H.R. 2112 restores $2 billion in funding that was cut in the House version of the bill; however, the proposed FY 2012 appropriations are still $130 million below the FY 2011 enacted appropriations level. The FY 2012 Agricultural Appropriations legislation cuts most rural housing programs slightly below FY 2011 levels; nevertheless, the Senate bill restores funding to the Section 538 program.

The Senate Appropriations Committee FY 2012 funding USDA-RHS multifamily programs at the following levels:

Rural Rental Assistance Proposed by the Senate for FY 2012: $905 million
- Rural Rental Assistance Proposed by the House for FY 2012: $883 million
- FY 2012 Budget Request: $907 million
- FY 2011 Appropriation: $956 million
Section 515 Housing Direct Loans Proposed by the Senate for FY 2012: $64.5 million
- Section 515 Housing Direct Loans Proposed by the House for FY 2012: $58.1 million
- FY 2012 Budget Request: $95 million
- FY 2011 Appropriation: $69.5 million
Section 538 Housing Loan Guarantees Proposed by the Senate for FY 2012: $130 million
- The legislation does not prohibits the use of authorized fees and would allow RHS to implement fees to cover subsidy costs.
- Section 538 Housing Loan Guarantees Proposed by the House for FY 2012: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans
Multifamily Housing Revitalization Program Proposed by the Senate for FY 2012: $13 million; $11 million for vouchers and $2 million for the demonstration program
- Multifamily Housing Revitalization Program Proposed by the House for FY 2012: $10.9 million for housing vouchers
- FY 2012 Budget Request: $16 million for housing vouchers
- FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

NAHMA applauds the Senate Appropriation’s Committee’s efforts to restore funding to RHS’s multifamily housing programs that the House has proposed cutting. We continue to encourage our members to call their Representatives and request their support for full-funding for all rural rental assistance contracts and adequate funding for the preservation and rehabilitation of rural properties.

A copy of the Senate Appropriations Committee report on H.R. 2112 may be found here: http://www.gpo.gov/fdsys/pkg/CRPT-112srpt73/pdf/CRPT-112srpt73.pdf

Congressional Joint Select Committee on Deficit Reduction

During the August recess, House and Senate leadership selected 12 Members of Congress to participate in the Joint Select Committee on Deficit Reduction. They are as follows: Sens. Patty Murray (D-WA), Max Baucus (D-MT), John Kerry (D-MA), Jon Kyl (R-AZ), Pat Toomey (R-PA), and Rob Portman (R-OH); and Reps. Jim Clyburn (D-SC), Xavier Becerra (D-CA), Chris Van Hollen (D-MD), Jeb Hensarling (R-TX), Dave Camp (R-MI), and Fred Upton (R-MI).

The Joint Select Committee began holding hearings this week.

HUD’s Rental Assistance Demonstration Program

In August, HUD began circulating their draft Rental Assistance Demonstration (RAD) program. RAD is the rental assistance conversion demonstration program that HUD has developed as the successor legislation to the Preservation, Enhancement, and Transforming Rental Assistance (PERTA) Act and Rep. Keith Ellison’s (D-MO) Rental Housing Revitalization Act of 2010 (H.R. 6468).

NAHMA is currently evaluating the legislation and plans to run it through NAHMA’s public policy process. A copy of the draft bill may be found here: http://www.nahma.org/member/New%20HUD%20Docs/RAD_Proposal_080311.pdf

House Financial Services Housing Subcommittee Holds Second Hearing of FHA and RHS Reform

Yesterday, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee held a second hearing on a draft FHA and Rural Regulatory Improvement Act. Testimony was given by Sen. Johnny Isakson (R-GA), Acting FHA Commissioner Carol Galante, RHS Administrator Tammye Trevino, and Government National Mortgage Association President Ted Tozer.

The bill would increase the capital ratios mandated for both the General Risk Insurance Fund and the Special Risk Insurance Fund, as well as increase the down payment required on FHA loans. The act would also transfer USDA-RHS and all of its programs to HUD.

Acting FHA Commissioner Galante had major concerns about increasing the minimum down payments for the loans, saying mortgages provided through FHA were profitable and increasing the down payment would deny thousands of families at low risk of default the opportunity to own a home. She also said that the increase in capital ratios for the General Risk Insurance Fund and the Special Risk Insurance Fund were unworkable. Galante also discussed the FHA’s success in growing the rental housing market at a time when little private capital was available to developers.

Both the Acting FHA Commissioner and RHS Administrator publically opposed the transfer of RHS to HUD at this time. They stated the agencies were already working together through the White House Rental Policy Working Group to align conflicting regulatory requirements. RHS Administrator Trevino also emphasized that the rural housing programs successfully serve a very specialized population with different needs than that of HUD. She stated that the RHS’s mission and the way the programs were delivered to rural areas differed greatly from HUD’s mission and program delivery and, as a result, required a different strategy that HUD could not immediately provide.

NAHMA opposes the legislation as currently written. We specifically oppose the FHA capital ratio and down-payment increases in the bill. However, NAHMA is neutral on the move of RHS to HUD.

Obama’s Jobs Speech

Last night, President Obama proposed a $447 billion job creation bill before a joint session of Congress, called the American Jobs Act, which would cut taxes and increase federal spending in American infrastructure and education. The President emphasized that these expenditures would be offset either by increases in revenue or as an additional element to the Joint Select Committee on Deficit Reduction’s efforts to decrease government spending.

The proposal included $15 billion for rehabilitation of vacant and foreclosed homes and businesses in order to increase construction jobs. Additional details on this proposal were not available at press time.

NAHMA will keep members informed as additional information about the proposal are announced.

More information on the American Jobs Act may be found here: http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-american-jobs-act

August 5, 2011

S. 627: Budget Control Act

This week, Congress passed S. 627, the Budget Control Act. The act raises the debt limit through 2012 and requires $2.5 trillion in government spending cuts over the next decade. There were no provisions in the legislation that would have increased tax revenues. President Obama signed the legislation into law on Tuesday.

The act increases the debt ceiling by $400 billion immediately. It also allows President Obama to increase the debt limit three times, up to $2.1 trillion total, through 2012. Congress may vote to stop the President from raising the debt-ceiling; however, the President may veto the motion, rendering the vote a symbolic protest.

The legislation requires Congress to cap discretionary spending over the next 10 years. This is expected to save the government $917 billion. However, only $21 billion will be saved in FY 2012. NAHMA expects the House to revise their budget for FY 2012, including the budget authority for each appropriations bill. It is quite possible the Transportation-HUD budget authority could be further reduced for FY 2012. The House Appropriations Committee has already proposed cuts of close to 20 percent for the FY 2012 Transportation-HUD budget authority from FY 2011 authorized appropriations levels, well below the FY 2008 appropriations levels for the account.

In NAHMA’s conversations with House Appropriations Committee staff, both Republican and Democratic staff said they plan to provide full funding for tenant-based Section 8, project-based Section 8, and Section 202 and 811 PRAC 12-month contracts before funding other programs. We believe there may not be much funding left over for new construction and rehabilitation programs like HOME, CDBG, and Section 202 and 811 new construction. The House Appropriations Committee currently plans to mark-up the FY 2012 Transportation-HUD appropriations bill as early as September. NAHMA will continue to advocate for full funding for all 12-month contracts and continued funding for new construction and rehabilitation programs for FY 2012.

The legislation also requires the Congress to vote on a balanced budget amendment to the Constitution before the end of the year. However, the amendment is unlikely to pass Congress. Both the House and the Senate already voted on a balanced budget amendment last month. While the House supported the legislation, the Senate voted it down. Furthermore, the White House publically opposed the balanced budget amendment that passed the House. This is also a largely symbolic move.

Under the bill, Congressional leaders would appoint a bicameral, bipartisan Joint Select Committee on Deficit Reduction, made up of 12 lawmakers charged with identifying additional deficit cuts worth about $1.5 trillion. The Committee must report precise deficit-reduction proposals by November 23. Congress must hold an up-or-down vote, without amendments, on the Committee’s report by December 23. If the Committee fails to act by the deadline or Congress fails to approve the Committee’s recommendations, across the board cuts will be applied to domestic and defense spending starting in FY 2013. In the case of across-the-board cuts, Social Security and Medicaid would be exempted from the cuts, and Medicare would only face cuts to providers and insurers, not beneficiaries.

The 12 lawmakers for the committee will be selected by mid-August. Senate Democrat and Republican leaders are expected to choose some committee members from the bipartisan “Gang of Six.” The “Gang of Six” is a self-appointed, bipartisan group of six Senators who are working on a larger deficit reduction effort, based on “The Moment of Truth” report issued by the President’s National Commission for Deficit Reduction and Responsibility in December. A copy of “The Moment of Truth” report may be found here: http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

Because this legislation was passed and signed into law by August 2, the United States did not default on their debts. All credit rating agencies have maintained the United States’ credit rating at AAA. However, global economic markets have not escaped this predicament unscathed. Many saw stock prices fall following the debt-ceiling agreements. Nevertheless, economic experts agree those falls would have been greater if the United States did not come to an agreement on raising the debt-ceiling.

NAHMA will keep members informed as Congress works on meeting the requirements of S. 627. We oppose any appropriations level that does not provide at least full funding for all tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACS, and rural rental assistance contracts for their 12-month terms. NAHMA also opposes any attempts to reduce funding or de-authorize any programs that support affordable housing efforts, including the LIHTC. We will continue to work with the Obama Administration and Congressional authorizers and appropriators to protect affordable multifamily housing programs going forward.

H.R. 2761: Increasing the Flexibility in USDA-RHS’s Definition of “Rural”

This week, Rep. Don Manzullo (R-IL) introduced legislation that would provide flexibility in the definition of rural areas in order to increase the areas eligible for housing assistance and programs offered by USDA-RHS. USDA would be given discretion to include places, towns, villages, etc. under the definition of rural is the population of that area is below 35,000 and is experiencing economic distress.

The legislation has been referred to the House Financial Services Committee.

July 29, 2011

Countdown to the Default

There are four more days until the United States potentially defaults on its existing debt obligations. There are a number of potential negative impacts associated with default.

First, if the Treasury loses its authority to borrow, economist Nigel Gault of IHS Global Insight—a company that provides global analysis services—predicted that the government would have to cut its spending by 40 to 45 percent.

Second, economic gains made since the 2008 economic collapse could slip away and harm recovery efforts according to Federal Reserve Board Chairman Ben Bernanke.

Finally, credit rating agencies would downgrade the United States’s credit rating from AAA to D, which would potentially increase interest rates and harm markets worldwide.

NAHMA has reached out to HUD and USDA-RD to find out if the Departments have a contingency plan or established payment priorities in the case of a default. HUD and USDA-RD staff indicated they have received no guidance or direction regarding potential impacts of any decisions related to the debt ceiling issue.

Currently, House Speaker John Boehner (R-OH), House Democrats, and Senate Majority Leader Harry Reid (D-NV) are pushing opposing debt limit plans. Boehner supports a two-part process, with a six-month debt limit extension and a second debt ceiling hike early next year if matching spending cuts are found. House Democrats have called on President Obama to invoke the 14th Amendment and raise the debt ceiling without Congressional approval. Senate Democrats also support a two-part process on deficit cuts, but insist Congress must allow the debt ceiling to be raised until after the November 2012 elections.

Budget Control Act of 2011

House Republicans plan to introduce an amendment to S. 627—the Faster FOIA Act of 2011—called the Budget Control Act. The amendment would strike the language of the Faster FOIA Act of 2011 and replace it with language to cut and cap discretionary spending immediately, saving $915 billion over 10 years while raising the debt-ceiling initially by $900 billion. Another vote on the debt-ceiling would be required in early 2012.
Next, the amendment would create a “Joint Committee of Congress” to draft a legislative plan to reduce the deficit by an additional $1.8 trillion over the next 10 years. Both the House and Senate would be required to hold an up-or-down vote on this legislative plan. If the proposal is enacted, the President would be authorized to request a debt-limit increase of $1.5 trillion.

The amendment would also impose caps on future spending. Failure to stay below the caps would trigger automatic across-the-board cuts. The House and Senate would also be required to vote on a balanced budget amendment before the end of the year.

The amendment would prohibit tax hikes to achieve cost savings.

Finally, the amendment would allow for the modification of the debt ceiling by the President and create a process for the Congress to disapprove of those modifications.

The House was supposed to vote on this legislation yesterday; however, House Democrats unanimously oppose the bill and House Republicans could not garner the 216 votes required for the legislation’s passage. Speaker Boehner said the House would try to vote on the bill today.

The Senate plans to hold a vote on the legislation as well, if the House passes the bill. However, the vote is likely to fail due to strong Senate Democrats opposition to this plan.

Furthermore, the White House does not support the House Republicans’ plan. Nevertheless, the President has remained silent on whether he would consider vetoing the plan if it passes Congress.

A copy of the text of the legislation may be found here: http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/S627%20amnt.pdf

House Democrats’ Debt-Ceiling Increase Proposal

House Democratic leaders have called on President Barack Obama to invoke the 14th Amendment of the Constitution to resolve the debt standoff.

Section 4 of the 14th Amendment states: “The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Basically, the Democrats believe that since the "public debt" cannot be questioned, then the debt ceiling itself is unconstitutional.

President Obama has previously expressed doubts about his legal authority to raise the debt limit without Congressional approval. The White House has yet to comment on the House Democrats call to use this tactic.

Senate Democrats’ Proposal

Senate Majority Leader Reid has proposed a deficit reduction plan, in conjunction with increasing the debt-ceiling, that would cut $1.2 trillion from discretionary spending through measures House Republicans agreed to during the White House discussions earlier this month. This would include $100 billion in savings from farm subsidies, reduced fraud and abuse in mandatory spending programs, reforming the GSEs, broadcast-spectrum sales and universal service fund reforms, and student-loan changes.

The plan also assumes $1 trillion in savings from winding down wars in Iraq and Afghanistan and includes $400 billion in savings from reduced interest payments.

Like the House Republicans’ proposal, the Senate Democrats would create a “Joint Committee of Congress” to draft a legislative plan to reduce the deficit by an additional $1.8 trillion over the next 10 years. Both the House and Senate would be required to hold an up-or-down vote on this legislative plan.

The Democrats plan would extend the debt-ceiling through the November 2012 elections.

Because the House has failed to pass their legislation, Majority Leader Reid is expected to move this proposal forward in the Senate as early as today

NAHMA will keep members informed as more information becomes available.

H.R. 967: Bed Bug Management, Prevention, and Research Act

Earlier this year, Rep. Jean Schmidt (R-OH) introduced legislation to support efforts to control and eradicate bed bugs with respect to public health—H.R. 967, the Bed Bug Management, Prevention, and Research Act. NAHMA plans to run this legislation through our public policy process.

The bill would create a grant program to be administered by USDA for research on effective ways to control and eradicate bed bugs, including additional chemical options.

The legislation would also create a task force to assist in awarding the research grants. The task force would be made up of representatives from: the pest management industry; the hospitality industry, the multi-family housing management industry, public health organizations, and other groups as identified by USDA.

Interested applicants would be required to submit research proposals, which would be evaluated by the task force for grant program consideration.
The legislation would also classify bed bugs as “vector” organisms, meaning they are potentially capable of transmitting diseases, under existing federal legislation. However, this classification may conflict with current scientific research, which has not produced evidence that bed bugs have the ability to transmit diseases.

The bill would require manufacturers who label pesticides as controlling a public health pest, like bed bugs, to submit data proving the product’s efficacy. If the data does not support the product’s claims, then the product may not be sold.

In addition, the act would create a bed bug prevention and mitigation pilot program to three state agencies to address persistent bed bug infestations for properties that require additional financial assistance to deal with the issue.

The legislation has been referred to the House Committee on Agriculture.

July 22, 2011

Countdown to the Default

There are 11 days left until the United States potentially defaults on its debt. Credit rating agencies are watching and waiting to see if the nation can develop a debt-ceiling increase compromise in the next few days. If the United States cannot reach an agreement or raise the debt-ceiling, several credit rating agencies plan to downgrade the U.S. credit rating. This week, Moody’s even suggested that the United States eliminate its debt ceiling requirements and adopt a debt system that mirrors the European Central Bank and the Euro. The White House and Congressional leaders continue to have private discussions as part of a “last-ditch” effort to garner enough votes for passage in both the House and Senate.

The current discussions are looking at $3.7 trillion in deficit reductions based off a plan introduced this week by the Senate “Gang of Six,” which Sen. Tom Coburn (R-OK) rejoined on Tuesday.

The plan would impose a two-step process: a bill that would make $500 billion worth of cuts immediately followed by a process to create a “fast-track” for restructuring tax and spending programs for a savings of over $3 trillion.

The first $500 billion in cuts could come from a range of sources, including statutory spending caps through 2015, freezing congressional pay, and selling unused federal property.

The “fast-track” process would require Congressional committees report legislation within six months that would “deliver real deficit savings in entitlement programs over 10 years.” Social Security changes would move on a separate track.

The “Gang of Six” plan also included a tax element that would have raised $1 trillion in new tax revenue and ended annual fixes to the Alternative Minimum Tax. However, Speaker of the House John Boehner (R-OH) and House Republicans oppose any deficit reduction effort that would raise taxes. As a result, the “Gang of Six” tax plan has been removed from the White House and Congressional leadership negotiations.

An executive summary of the “Gang of Six” proposal can be found here: http://thehill.com/images/stories/gangofsix_plan.pdf

Meanwhile, the Senate voted down the balanced budget amendment-H.R. 2560, the Cut, Cap, and Balance Act of 2011-today. The House passed the bill earlier this week; however, the move was largely symbolic due to Senate and White House opposition to the legislation.

The balanced budget amendment, if ratified, would have put in place several obstacles to higher spending, including requirements that total outlays cannot exceed total receipts and that total spending cannot exceed 18 percent of U.S. GDP. These rules could have only been waived by a two-thirds majority vote in both the House and the Senate. The amendment also would have required that any bill imposing a new tax or increasing the statutory tax rate be approved by a two-thirds vote in each House of Congress.

NAHMA will keep members informed as this process moves forward.

Sen. Coburn Introduces Own Deficit Reduction Plan

On Monday, Sen. Tom Coburn (R-OK) announced his new deficit-reduction plan, which would provide around $9 trillion in savings over 10 years, for Congressional consideration. However, the plan as a whole is unlikely to be seriously considered by Congress because Sen. Coburn rejoined the Senate bipartisan “Gang of Six” deficit negotiations on Tuesday. The “Gang of Six” plan looks to provide $4.7 trillion in savings over a 10 year period, significantly less than the Coburn plan.

The plan recommends $3 trillion in savings from entitlements, $3 trillion in savings from discretionary spending, $1 trillion in reduced spending from defense, $1 trillion from ending various tax expenditures, and the final $1 trillion from interest costs. The eliminations of tax expenditures are particularly controversial because Republicans continue to oppose any increases in taxes. Furthermore, Coburn proposed eliminating the low-income housing, the new markets, historical preservation, and rehabilitation tax credits, which are often used in new construction and rehabilitation of affordable housing units.

However, Coburn used very selective and, sometimes, outdated sources to help provide justification for the eliminations. The report states, “Using the tax code to promote affordable housing is both inefficient and duplicative of countless programs at the Department of Housing and Urban Development, which provides other forms of federal assistance to help those in need of housing.” This is simply not the case because the LIHTC is one of the few government programs that directly leverages private capital for the specific purpose of assisting with affordable housing construction and rehabilitation. HUD’s programs are comprised of loans and grants directly from the Federal government. With the Federal government focused on reducing government spending, NAHMA believes it makes no sense to attempt to eliminate the only program available for directly leveraging private capital to help improve and expand affordable housing.

In Coburn’s justification for eliminating the LIHTC, the plan also cites a 1992 Congressional Research Service memorandum which stated, “The low-income housing credit, like other supply subsidy mechanisms, is unlikely to increase substantially the supply of affordable housing. Subsidized housing largely replaces other housing that would have been available through the private, unsubsidized housing market.” This information is incredibly outdated and flies in the face of current economic realities. The LIHTC has helped create thousands of units in the last 20 years to house millions of low-income households nationwide. Furthermore, the private, unsubsidized housing market has stagnated due to the 2008 housing bubble burst and economic meltdown. Unlike conventional market developments, LIHTC is specifically income targeted to people whose incomes are less than 50 or 60 percent of area median income. The LIHTC was one of the few options available for the last three years for any developer looking to construct new housing units.

In USDA-RD, Coburn’s plan recommends allocating resources, including RHS funding, to communities with the greatest needs and fewest local resources. Additional details on cuts to RHS programs were not included in the plan’s text.

For HUD, the Coburn plan recommends improving financial management and eliminating unnecessary administrative costs. In terms of the Section 8, Section 202 and 811, and other multifamily housing programs, this entails eliminating improper payments, consolidating duplicative programs, and ending payments to slum lords. The plan recommends additional background checks on grant recipients and banning landlords and developers with histories of violating housing standards or failing safety inspections from participating in Federal programs. However, the Coburn plan fails to recognize that HUD has programs already in place to achieve that end, like the 2530/APPS system.

The Coburn plan recommends the elimination of HUD’s HOME program and the cancellation of all HOME projects in the pipeline based on The Washington Post HOME investigation. The report, however, fails to take into account the updated information provided by HUD and Google’s admission that the pictures used in the Post expose were significantly outdated. The report is also ignorant of the fact that many resources are used in conjunction with HOME funding to complete deals and recapturing that funding will delay or cancel many projects in progress.

The report supports eliminating new construction funding for the Section 202 and 811 programs. The plan also recommends creating a new distribution formula for and significant reductions to CDBG appropriations.

Despite Coburn’s push to have his entire spending reduction plan adopted, he encouraged those working on deficit cuts to “pick and choose” savings items from his plan. For a copy of the deficit reduction plan, please visit: http://coburn.senate.gov/public/index.cfm/back-in-black-a-deficit-reduction-plan

NAHMA is reasonable confident based on our conversations with the Senate Finance Committee that the Committee will not seriously consider eliminating the LIHTC. Based on our conversations with Congressional appropriations committee staff, we also believe that Congress intends to continue to provide full-funding for all tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance contracts.
However, we are very concerned about the possibility of large cuts to new construction and rehabilitation grant and loan programs like HOME, CDBG, Section 538, Section 515, the Rural Multifamily Housing Preservation and Rehabilitation program, and Section 202 and 811 capital advances. NAHMA will continue to educate Congressional members on affordable housing spending and the important role that tax credits, like the LIHTC, play in providing affordable housing nationwide. We also encourage NAHMA members to contact their Congressional Representatives and let them know you support:

Full funding for all rental assistance programs, including:
- All 12-month project-based Section 8 contracts;
- All Housing Choice Voucher contract renewals;
- PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
- Section 521 Rural Rental Assistance contracts;
Continued funding for new construction and rehabilitation programs; and
The Low-Income Housing Tax Credit program.

July 15, 2011

Carol Galante Named Acting FHA Commissioner

On Tuesday, the Obama Administration tapped Multifamily DAS Carol Galante to take over as Acting Assistant Secretary for the Office of Housing and FHA Commissioner. HUD officials have not elaborated on plans to name a permanent director, which would require a presidential nomination and Senate confirmation, but industry officials believe Galante is likely to be nominated for that job.

Janet Golrick will serve as Acting DAS for Multifamily Housing while HUD identifies candidates for the position. We will inform NAHMA members as soon as we have additional information.

Countdown to the Default

Last weekend, Speaker of the House John Boehner left talks between the White House and Congressional leaders on a large deficit reduction package of $4 trillion. Republicans continue refusing to considering any tax increases as part of the spending reductions deals tied to raising the debt-ceiling. The media is reporting that Congressional leaders and the White House will spend the weekend negotiating a short-term resolution: a 6-8 month extension of the debt-ceiling tied to $2 trillion in government spending cuts.

Unless the debt limit is raised before August 2, the United States is 18 days away from potential default on the national debt. However, there is speculation that the Department of Treasury may juggle its accounts in order to give Congress an extra week to raise the debt-ceiling. Congress is already considering cancelling the first week of August recess, which was scheduled to being August 6.

Senate Minority Leader Mitch McConnell (R-KY) has proposed complex legislation to give President Obama authority to raise the debt ceiling in a dire situation through a series of maneuvers that would foist full ownership of the debt limit on Democrats. However, House Republicans and the White House do not feel this proposal is a viable option.

The House plans to vote on a balanced budget amendment to the Constitution next week. The amendment, if ratified, would put in place several obstacles to higher spending, including requirements that total outlays cannot exceed total receipts and that total spending cannot exceed 18 percent of U.S. GDP. These rules could only be waived by a two-thirds majority vote in both the House and the Senate. The amendment also would require that any bill imposing a new tax or increasing the statutory tax rate be approved by a two-thirds vote in each House of Congress. However, the amendment will not get the 67 votes it needs to pass the Senate and the White House opposes it.

In the meantime, Senate Budget Committee Chair Kent Conrad (D-ND) previewed his FY 2012 budget resolution before the Senate this week. The budget resolution proposes $4 trillion in deficit reductions over the next decade through equal parts spending cuts and tax increases. Conrad believes the resolution would reduce the deficit to 2.5 percent of GDP by 2015 and 1.3 percent of GDP by 2021. Not only would the legislative and executive branch budgets be frozen for the next three years, Members of Congress pay would be frozen for three years. Federal travel and vehicle costs would be reduced by 20 percent, while Federal printing costs would be reduced by $1 billion by 2015.

The budget resolution also includes tax reform proposals that would simplify the tax code and close loopholes. The Bush tax cuts would be extended for individuals earning up to $500,000 a year and for couples earning up to $1 million a year. The budget also assumes continued alternative minimum tax relief and proposed reforming the estate tax. The budget would lower corporate tax expenditures to 29 percent and engage the Senate Finance Committee to close tax loopholes. No additional details on Conrad’s plan to reform the tax code have been made public at this time.
Sen. Jeff Sessions (R-AL), the Budget Committee's ranking member, announced that he will oppose upcoming appropriations bills because the chamber has not produced a budget.
NAHMA will continue to monitor the situation and inform our members of any changes as they arise.

House Financial Services Subcommittee on Capital Markets and GSEs Mark-Up Second Round of GSE Bills

On Tuesday, the House Financial Services Subcommittee on Capital Markets and GSEs passed a second round of bills to wind down Fannie Mae and Freddie Mac. A summary of the bills, as passed, and amendments are as follows:

H.R. 463: Fannie Mae and Freddie Mac Transparency Act of 2011

This legislation would apply the Freedom of Information Act to Fannie Mae and Freddie Mac during their conservatorship or receivership.

H.R. 2436: Fannie Mae and Freddie Mac Taxpayer Payback Act of 2011

The bill would prohibit any reduction in the rate of dividends paid to the Treasury on the senior preferred stock of Fannie Mae and Freddie Mac purchased by the Department

H.R. 2441: Housing Trust Fund Elimination Act

The bill would terminate the National Housing Trust Fund.

Rep. Al Green (D-TX) offered two amendments. The first would have modified to language so that the Trust Fund remained in place, but eliminated GSE funding for the fund. The first amendment was not adopted.

The second amendment added a congressional finding to the bills that recognized the growing veterans among the homeless population and acknowledged the need for additional affordable housing for this population. This amendment was agreed to.

NAHMA opposes eliminating the Housing Trust Fund.

H.R. 2440: Market Transparency and Taxpayer Protection Act

The act would require Fannie Mae and Freddie Mac to sell or dispose of the assets of such enterprises that are not critical to their missions.

Rep. Gary Peters (D-MI) offered an amendment that would require the Federal Housing Finance Agency to make residential real-estate data on assets held by the GSEs public, excluding sensitive personal information.

Rep. Carol Maloney (D-NY) offered an amendment that would require the Federal Housing Finance Agency to consider the market impact of selling any multifamily housing mortgages and assets and determining if those assets were non-critical to the GSEs’ missions prior to sale. However, Rep. Maloney withdrew this amendment.

H.R. 2462: Cap the GSE Bailout Act

This legislation would limit the amount of Federal dollars that could be provided to Fannie Mae and Freddie Mac to $200 billion.

H.R. 2439: Eliminate the GSE Charter During Receivership

The act would authorize the Federal Housing Finance Agency, as receiver of Fannie Mae or Freddie Mac, to revoke the charters of GSEs while under receivership.

Rep. Gary Peters (D-MI) offered an amendment that would require the Federal Housing Finance Agency to conduct a study analyzing the economic impact of eliminating the Federal government’s role in the secondary mortgage market. This amendment was adopted.

These bills will now go before the full House Financial Services Committee for mark-up.

H.R. 2495: Tax Equity and Middle Class Fairness Act of 2011

This week, Rep. John Tierney (D-MA) introduced H.R. 2495, the Tax Equity and Middle Class Fairness Act of 2011, which would terminate 30 tax expenditures, saving the government over $60 billion in the first year and nearly $483 billion over the next 5 years. Tax expenditures that would be eliminated include:

Oil and gas tax breaks;
Coal tax breaks;
Changes to business accounting methods;
International corporate tax subsidies;
“Carried interest;”
Corporate meal and entertainment write-offs;
Agribusiness and timber subsidies;
Foreign earned income exclusion; and
Medical and health savings accounts.

In addition to eliminating nearly 30 tax expenditures, H.R. 2495 would also require the Government Accountability Office to evaluate the effectiveness of all remaining tax expenditures in current law and report to Congress with recommendations for the elimination of provisions that are poorly targeted or serve no public purpose.

The bill has been referred to the House Ways and Means Committee.

July 8, 2011

Countdown to the Default

Unless the debt limit is raised before August 2, the United States is 25 days away from potential defaulting on the national debt. The Department of Treasury currently does not have a backup plan in the event of a default. There is a consensus between both chambers of Congress that a debt ceiling increase will not pass unless it is tied to a plan to reduce government spending by at least $2.5 trillion over the next decade.

The White House and Congressional leaders have agreed to almost $2 trillion in spending cuts over the next decade but would like to reach $4.5 trillion in reductions. They are still negotiating how to create a savings of $500 billion. President Obama announced yesterday that White House officials and Congressional leaders will work through the weekend until a deal is reached.

President Obama has said he is willing to negotiate some spending cuts from Medicaid, Medicare, and Social Security, as well ask extend the alternative minimum tax break for 10 years. However, his fellow Democrats remain strongly opposed to any spending reductions for the entitlement programs. On Wednesday, House Majority Leader Eric Cantor (R-VA) indicated that the Republicans might be more flexible on closing tax loopholes. Previously, the GOP adamantly opposed closing tax loopholes or raising any taxes.
If no agreement is reached, it is possible Congress may consider a short term debt limit increase of six to eight months.
In the meantime, Senate Budget Committee Chairman Kent Conrad (D-ND) has floated his draft FY 2012 budget resolution by Senate Democrats. The plan was “well-received,” according to Chairman Conrad. The resolution would reduce the deficit by some $4 trillion— $2 trillion in spending cuts and $2 trillion in tax increases—over 10 years. However, the proposals would not be binding if the bill passed. Chairman Conrad was also unsure of how his proposal would fit into the debt-ceiling debate. “What I am trying to do is reserve the chance for the bipartisan leadership to use a budget resolution,” he said.

GSE Reform Continues

This week, a number of bills were introduced in the House to reform Fannie Mae and Freddie Mac that could impact affordable multifamily housing. They are as follows:

H.R. 2413: Legislation introduced by Rep. Gary Miller (R-CA), which would establish a sustainable Federal Secondary Market Facility for Residential Mortgages that is financed by private capital, terminate the conservatorships of Fannie Mae and Freddie Mac, and repeal the charter Acts of the GSEs.

H.R. 2440: Legislation introduced by Rep. Robert Hurt (R-VA), which would require Fannie Mae and Freddie Mac to sell or dispose of the assets of such enterprises that are not critical to their missions.
H.R. 2441: Legislation introduced by Rep. Ed Royce (R-CA) that would eliminate the National Housing Trust Fund. The Housing and Economic Recovery Act of 2008 arranged for a percentage of Fannie Mae and Freddie Mac’s profits to be funneled into the Housing Trust Fund. However, this never came to fruition due to the collapse of the housing market and the advent of the GSE conservatorship.

These bills have been referred to the House Financial Services Committee. NAHMA opposes any effort to eliminate the National Housing Trust Fund.

July 1, 2011

Section 8 Savings Act Hearing

Last week, the House Financial Services Insurance, Housing, and Community Opportunity Subcommittee held a hearing on a draft proposal to reform the housing choice voucher program, the Section 8 Savings Act. NAHMA submitted written testimony for the hearing record indicating our support for the legislation and our strong support for the limited English proficiency (LEP) guidance language.

SESA is modeled after a streamlined version of the Section 8 Voucher Reform Act (SEVRA), which was before Congress in late 2010.

Both HUD and industry stakeholders indicated their general support for the legislation. Many industry stakeholders also said they supported the LEP guidance language. However, there was much concern from the PHA organizations over the reduction of housing choice voucher administration fees in the FY 2011 appropriations and the potential for additional cuts for FY 2012. Many panelists also supported increasing PHA authority to project base vouchers from 20 to 25 percent of the project.

Subcommittee Chair Judy Biggert (R-IL) was concerned over the long waiting lists for housing choice vouchers. Public and Indian Housing Assistant Secretary Sandra Henriquez explained it was an issue of supply and demand: the demand for affordable housing in general was greater than supply, which was brought on in part by the significant increase in households with worst case housing needs—those paying more than 50 percent of their income in rent—over the last decade.

Many other Subcommittee Republicans wanted to know more about the possibility of implementing work requirements and time limits for HUD assisted properties. The House Financial Services Committee included the enaction of work requirements and time limits for Section 8 programs in their oversight plan for the 112th Congress. Industry panelists explained it would be difficult because the majority of tenants in these properties were elderly or disabled and on fixed incomes. Furthermore, almost all tenants who are able to work are working, they explained.

For the archived webcast and copies of the hearing testimony, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=247180

For a copy of NAHMA’s written testimony, please click here: http://www.nahma.org/Leg%20area/SESA%20Testimony%20June%202011%20House.pdf

Debt and Deficit Reduction Talks Heat Up

The last two weeks have resulted in some major changes in various debt and deficit proposals around Washington, D.C. First, Rep. Eric Cantor (R-VA) and Sen. Jon Kyl (R-AZ) have exited the Congressional leadership talks brokered by the White House and Vice President Joe Biden. Previously, they had identified about $2 trillion in mutually agreeable spending reductions over a ten-year period. However, details of the identified reductions are not publically available.

The impasse arose upon the Democrats’ insistence that increases in tax revenue should also be part of the conversation. Both Speaker of the House John Boehner (R-OH) and President Obama have been part of the negotiation to resolve the impasse over taxes. So far, there seems to be agreement between Democrats and Republicans to make further cuts to military spending. Senate Budget Committee Chairman Kent Conrad (D-ND) has advised Democratic leadership that the Republicans might be more receptive to tax increases if the Democrats were willing to offer a permanent fix to the alternative minimum tax.

Meanwhile, the Senate has been abuzz over ways to reduce government spending and has cancelled its July 4th recess to work on the debt and deficit talks.

First, Senate Democrats plan to vote on a bill to eliminate specific tax loopholes next week, which would increase government revenue by $600 billion. These loop-holes include: ending subsidies for oil and gas companies; limiting itemized deductions for the wealthy; taxing hedge-fund managers at higher income tax rates rather than at capital gains rates; repealing a tax benefit some manufacturers get from use of a so-called “last in, first out” (LIFO) inventory accounting practice; and changing the depreciation formula for taxes on corporate jets. Republicans are expected to filibuster the effort.

Next, Chairman Conrad plans to release the Committee’s FY 2012 budget resolution next week, due in part to the breakdown of the White House discussions. However, no details are available on the resolution and Conrad does not plan on marking up the resolution until after the debt ceiling talks conclude. The media believes that the budget resolution could emerge as a vehicle to move whatever deal results from the White House discussions, since the resolution cannot be filibustered in the Senate.

Third, Sen. Pat Toomey (R-PA) has introduced S. 1290, which would cap federal spending at about 18.5 percent of GDP. The bill would also require a two-thirds vote in both the House and the Senate to waive the annual caps for any reason, while automatic sequestrations would reduce spending if the caps were exceeded. It is important to note that Sen. Toomey also introduced a resolution in May that would cut government spending to 18.5 percent of projected GDP by 2021, which received 42 votes in the Senate—the most votes out of any budget proposal considered in the Senate this year so far. It is unlikely the Senate Democratic leadership will move this legislation forward.

In addition, Senate Minority Leader Mitch McConnell introduced S.J. Res. 23, which would add a balanced-budget amendment to the Constitution. The amendment, if ratified, would put in place several obstacles to higher spending, including requirements that total outlays cannot exceed total receipts and that total spending cannot exceed 18 percent of U.S. GDP. These rules could only be waived by a two-thirds majority vote in both the House and the Senate. The amendment also would require that any bill imposing a new tax or increasing the statutory tax rate be approved by a two-thirds vote in each House of Congress. The House plans to consider a similar resolution in the near future, H. Res. 1, introduced by Rep. Bob Goodlatte (R-VA) earlier this year. Nevertheless, it is extremely unlikely these resolutions would garner the two-thirds majority in both the House and Senate required for passage before it is sent to the states for ratification.

Finally, Senate Majority Whip Dick Durbin (D-IL), a member of the former “Gang of Six/Five Guys” believes a deficit reduction effort could be built around the “Gang’s” proposal which would cut the deficit in two steps: a “down payment” tied to an increase in the $14.3 trillion debt ceiling followed by a second $4 trillion reduction. However, the media believes Durbin’s stance indicates the “Gang” will not be able to release a deficit reduction plan before August 2, when the Treasury Department says the government’s borrowing authority will expire.

In the shadow of the looming August 2 deadline, the Bipartisan Policy Center has released a study that shows the United States will not be able to pay nearly half of its obligations if it lapses into default, making it imperative the White House and Congress reach a compromise on the debt limit before then.

June 17, 2011

Debt Limit and Deficit Update

This week, the media reported that some concrete progress had been achieved on the debt limit talks being led by Vice President Joe Biden. Bipartisan Congressional leaders and the White House appear to have reached a broad agreement to set deficit caps and enact a trigger mechanism when those caps were reached to keep the deficit under control, according to Rep. Chris Van Hollen (D-MD), one of the participants. The Biden group plans to meet again next week. They would like to have a deal on the deficit reduction plan ready by July 1.

The Senate’s “Five Guys” believe they will complete their proposal for a deficit reduction plan—about $4.5 trillion in spending reductions—soon. Sen. Mark Warner (D-VA) said the group’s plan will rely on a ratio of roughly 3:1 spending cuts to revenue raises – with one of the three coming from savings and interest, putting the real ratio at about 2:1. This is the same deficit reduction formula put forth by the President’s bipartisan Commission on Fiscal Responsibility and Reduction in their “Moment of Truth” report last December.

The “Five Guys” also plan to lower taxes by closing tax-loopholes; however, those loopholes have not been specified. The “Moment of Truth” report, which has been extensively used in the deficit reduction negotiations, recommended eliminating all corporate tax breaks, including the LIHTC. NAHMA has reached out to the relevant Senate “Five Guys” budget staff to inquire about the extent the LIHTC has been involved in the group’s tax reform discussions. We will inform members of any new information as it develops.

The Department of Treasury has announced that Congress has until August 2 to raise the debt limit. On that date, the United States will have exhausted its borrowing authority and begin defaulting on its current fiscal obligations. If Congress cannot raise the debt ceiling before August 2, Fitch Ratings, Moody’s Investors Service, Standard & Poor's, and a number of smaller foreign credit agencies have warned they plan to downgrade the United States credit rating.

Section 8 Savings Act

This week, House Financial Services Committee Republicans circulated draft language for the Section 8 Savings Act (SESA). SESA is the Republican version of the Section 8 Voucher Reform Act (SEVRA) and resembles the paired down version of SEVRA that NAHMA, industry colleagues, Congress, and HUD negotiated in late 2010. The House Financial Services Committee Republican staff believe the Act will save $1 billion in government spending.

SESA would:

Streamline inspections of housing units, which will be especially helpful to voucher-holders in tight rental markets with low vacancy;
- Minor repairs can be made within 30 days;
- PHAs may allow occupancy prior to the inspection in buildings which passed an alternative inspection (HOME, LIHTC or other inspections with equally stringent HQS standards) within the last 12 months;
Simplify the rules for determining a family’s rent and income;

Allow private owners of properties receiving project based assistance to voluntarily make a local Family Self-Sufficiency program available to tenants by entering into a cooperative agreement with a local PHA;

Authorize HUD to provide Limited English Proficiency (LEP) technical assistance which:
- Creates a stakeholder working group to identify vital documents for translations;
- Requires HUD to translate identified documents within six months; and
- Creates a HUD-administered 1-800 hotline to assist with oral interpretation needs;
Authorize enhanced vouchers to protect tenants living in projects with expiring HUD-subsidized mortgages (current law only provides enhanced vouchers to such properties for mortgage prepayments);

Extend the Mark-to-Market program through September 31, 2015.

For a copy of the draft legislation, please visit: http://www.nahma.org/member/Legislation/06-16-11%20SESA_Discussion%20Draft.pdf

The House Financial Services Committee will hold a hearing on the draft version of SESA on Thursday June 23 at 10 AM EST. NAHMA plans to submit written testimony to the Committee on SESA.

For more information on the hearing, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=247180

H.R. 2112: FY 2012 Agricultural Appropriations

This week, the House passed H.R. 2121, the FY 2012 Agricultural Appropriations Act. The bill provides funding for USDA programs in FY 2012. The FY 2012 Agricultural Appropriations legislation cuts funding to every rural multifamily housing program and eliminates the Section 538 program.

Please note the funding amounts for rural housing programs have been further cut 0.78 percent from the House Appropriations Committee approved levels due to the House adopting an amendment from Rep. Jack Kingston (R-GA).

The House has proposed FY 2012 funding USDA-RHS multifamily programs at the following levels:

Rural Rental Assistance: $883 million
- FY 2012 Budget Request: $907 million
- FY 2011 Appropriation: $956 million
Section 515 Housing Direct Loans: $58.1 million
- FY 2012 Budget Request: $95 million
- FY 2011 Appropriation: $69.5 million
Section 538 Housing Loan Guarantees: $0
- FY 2012 Budget Request: $0
- FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans
Multifamily Housing Revitalization Program: $10.9 million for housing vouchers
- FY 2012 Budget Request: $16 million for housing vouchers
- FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

The House rejected an amendment from Rep. Paul Broun (R-GA) that would have reduced funding for Rural Housing Assistance Grants by $20,480,000.

The House also rejected an amendment from Rep. Paul Gosar (R-AZ) that would have increased funding for the Multi-Family Housing Revitalization Program and the Rural Business Program by $100 million each.

The White House has publically stated that the Administration opposes the bill as currently written, but stopped short of issuing a veto threat.

NAHMA believes these large cuts will be extremely harmful to the RHS multifamily housing programs. The RHS portfolio is in desperate need of rehabilitation. Furthermore, the program is experiencing vacancy problems brought on by economic realities and a lack of rural rental assistance for those who need it. Cutting rural rental assistance and vouchers to RHS programs will reduce the number of low-income households who are able to reside in affordable rural properties. NAHMA will work to restore these cuts in the Senate.

We would also encourage our members to call their Senators and ask for full funding for all rural rental assistance contracts and funding necessary for preservation and rehabilitation of rural properties.

For information on contacting your Senators, please click here: http://senate.gov/general/contact_information/senators_cfm.cfm

FHA and Rural Regulatory Improvement Act

This week, NAHMA completed its public policy position process for the FHA and Rural Regulatory Improvement Act. NAHMA has decided to oppose the FHA capital ratio and down-payment increases and remain neutral on the move of RHS to FHA; however, NAHMA has decided to oppose the overall legislation as written.

The bill would change the capital ratios mandated for both the General Risk Insurance Fund and the Special Risk Insurance Fund, requiring a HUD to maintain a capital ratio of at least 1.25 percent 2 years after the legislation is enacted and at least 2 percent 5 years after the legislation is enacted. The legislation would also require a down payment of 5 percent on all FHA loans, up from the current 3.5 percent requirement and prohibit the use of the loan to help finance closing costs.

The act would transfer USDA-RHS and all of its programs to HUD. HUD would be required to create a transition/reorganization plan to incorporate RHS within HUD’s Office of Housing over an 18-month period. The President would have the right to review and/or change parts of the transition plan as he sees fit. RHS would still be required to fulfill its administrative duties during the transition. HUD’s Inspector General would assume oversight of RHS after the transition. The act also creates a Deputy Assistant Secretary for Rural Housing within the Office of Housing.

In addition, the bill would require lenders to pay a guarantee fee of one percent of the principal obligation of all new Section 538 loans and an annual fee of 0.5 percent on all outstanding principal obligations of the 538 loans.
The bill has not been introduced in the House. However, the House Financial Services Committee has held a hearing on the draft legislation. More information about that hearing may be found here: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=241957

June 10, 2011

Deficit and Debt Limit Updates

Yesterday, Congressional leadership deficit reduction talks, led by Vice President Biden, continued at the White House. The agenda included discussions on possible tax increases, closing tax loopholes, and spending caps. Rep. James Clyburn (D-SC), a member of the Democratic Congressional leadership participating in the talks, said he hoped to have a plan for deficit reduction completed by July 4. However, additional details from the talks are being kept under wraps.

The Senate’s “Five Guys”*, formerly known as the “Gang of Six,” is still working on a long-term deficit reduction plan as well, despite the departure of Sen. Tom Coburn (R-OK). They are looking to cut $4.7 trillion over the next decade, which could increase up to $6 trillion if economic activity picks up, according to “Guys” member Sen. Saxby Chambliss (R-GA). Nevertheless, the “Five Guys” have no timetable for unveiling its plan, despite the August 2 deadline when the Treasury Department says it will have exhausted its borrowing authority and the United States will begin defaulting on its current fiscal obligations.

Furthermore, if Congress cannot raise the debt ceiling before August 2, Fitch Ratings, Moody’s Investors Service, and Standard & Poor's credit agencies have warned they plan to downgrade the United States credit rating.

However, Republicans continue to oppose tax increases as part of the deficit reduction plan. Many Republicans, like Sen. John Kyl (R-AZ), refuse to vote for a debt ceiling increase of $2.4 trillion unless it is accompanied by a plan to provide matching government spending cuts over the next decade.

Media reports indicate that it is becoming more likely that cuts or reforms to entitlement programs will be deferred until after the 2012 election.

*Five Guys is the new media moniker for the bipartisan group of Senators working on long-term deficit and debt reduction plans. Five Guys also refers to a very popular D.C. based burger chain.

Republican Study Committee Issues New Budget Proposal

On Wednesday, the Republican Study Committee sent a new budget proposal to the House Republican leadership that would “cut, cap, and balance” the federal budget. The spending reduction proposal calls for:

$380 billion in spending cuts for FY 2012, about15 percent of current government spending, in order to reduce the deficit by half;
Spending caps to reduce total federal spending to 18 percent of GDP; and
Congressional passage of a Balanced Budget Amendment to the Constitution that would also make it more difficult for Congress to increase income taxes.

The letter and subsequent documents did not provide any recommendations on how Congress should cut or cap spending. A copy of the letter may be found here: http://rsc.jordan.house.gov/UploadedFiles/RSC_DEBT_CEILING_LETTER--FINAL--May_2011.pdf

June 3, 2011

House Financial Services Committee Holds Oversight Hearing on HOME Program

Today, the House Financial Services Committee held an oversight hearing on the HOME program in response to several articles reporting on alleged mismanagement of HUD’s HOME funds that the Washington Post published in mid-May. Testimony was provided by HUD’s Assistant Secretary for Community Planning and Development Mercedes Mãrquez and HUD’s Assistant Inspector General for Audit James Heist.

House Financial Services Committee Chairman Spencer Bachus (R-AL) stated the purpose of the hearing was to give HUD a public opportunity to respond to the Washington Post’s allegations of HOME funds mismanagement. He also noted this was not an issue specific to the Obama Administration; the problem spanned across the Clinton and Bush Administrations as well. Ranking Member Barney Frank (D-MA) commended the program for all the good work it has achieved thus far and entered an industry letter, signed by NAHMA and other colleagues, into the hearing record stating their support for the program.

Assistant Secretary Mãrquez said that the Washington Post series misstated the number of delayed properties. Only half of the 700 properties the Post identified were delayed or stalled, and the majority of those were due to the recession. Only two and a half percent of the HOME portfolio used funds for ineligible activities, a very small number which actually included fraud. She also stated the Washington Post used outdated pictures acquired from Google Maps, on average three years old, to substantiate some of their claims. Mãrquez reminded the Committee that the program had created 1 million units of affordable housing that would benefit millions of low-income households during their required periods of affordability.

Assistant Inspector General Heist also agreed that there was a small percentage of misused funds but the program on the whole had been very successful at meeting its goals of increasing affordable housing for low-income Americans. In order to improve risk management, control, and monitoring of the HOME program, Heist suggested that HUD improve data integrity and systems enhancements. HUD has already started to improve these systems through appropriations provided in FY 2010 and FY 2011 in HUD’s Transformation Initiative to upgrade outdated HUD systems.

Many Congressional Members had questions about the repayment requirements in local HUD contracts. Mãrquez said the agency was already working on an updated rule to improve oversight in the HOME program that would include model legal agreement language to enforce repayment by developers when they use the funding for ineligible activities. The Assistant Secretary also noted that, while repayments cannot be made from Federal funds, the repayments often come from state and local tax receipts, which she believed helped to create a deterrent from giving money to local developers who might mismanage the funds.

Congressman Luis Gutierrez (D-IL) reminded the Committee that HOME funds are usually a small percentage of the actual development costs. Mãrquez agreed, stating that $1 of HOME funds were typically used to leverage $4 in other funding, like low-income housing tax credits (LIHTC), making HOME an excellent example of a public-private partnership to help increase affordable housing nationwide.

Congressman Blaine Luetkemeyer (R-MO) asked about the major oversight problems in the HOME Program. Assistant Secretary Mãrquez stated that HUD had put the oversight policies in place for the local jurisdictions in charge of distributing and monitoring the funds but that the local jurisdictions did not always follow the policies, often due to their own lack of capacity to perform the oversight obligations, especially at the city government level.

For more information on the hearing, including witness testimonies and a link to the archived webcast (which should be posted later today), please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=242647

Debt Limit and Spending Reduction Talks Update

On Tuesday, the House rejected a measure to increase the government’s debt limit, a move used by Republicans in order to pressure President Obama to agree to deep spending cuts over the next decade as a condition of increasing the debt limit. Republicans brought up the measure to show the lack of support in the House for raising the $14.3 trillion debt ceiling without concrete steps to rein in chronic budget deficits.

The White House also held separate briefings with Republicans and Democrats this week; however, no progress was made on spending reductions at either meeting because the President expects details to be handled in the Biden talks. Press statements by the White House continue to object to linking deficit reduction and the debt limit. However, Press Secretary Jay Carney emphasized the President is committed to both initiatives. Negotiations between Congressional Leadership and the White House are ongoing.

Speaker of the House John Boehner (R-OH) has publically stated that he hopes the negotiations will come to conclusion soon and the House can hold a vote on raising the debt limit in conjunction with a mutually acceptable plan for spending reductions. The Speaker insists the spending cuts must exceed the increase in the debt limit.

H.R. 2112: FY 2012 Agriculture Appropriations

On Tuesday, the House Appropriations Committee approved the legislative language for the FY 2012 Agriculture Appropriations. The FY 2012 appropriations legislation cuts funding to every rural multifamily housing program and eliminates the Section 538 program.

Proposed FY 2012 funding USDA-RHS multifamily programs is as follows:

Rural Rental Assistance: $890 million

FY 2012 Budget Request: $907 million
FY 2011 Appropriation: $956 million

Section 515 Housing Direct Loans: $58.6 million

FY 2012 Budget Request: $95 million
FY 2011 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $0

FY 2012 Budget Request: $0
FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans

Multifamily Housing Revitalization Program: $11 million for housing vouchers

FY 2012 Budget Request: $16 million for housing vouchers
FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

We would also encourage our members to call their representatives and ask for full funding for all rural rental assistance contracts and additional funding to support the deteriorating stock of rural properties.

For information on contacting your Congressional Representatives, please click here: http://house.gov/htbin/findrep?ZIP =

House Budget Committee Holds Hearings on GSE Reform

On Thursday, the House Budget Committee held a hearing to discuss taxpayer exposure in the housing market, specifically exposure associated with Fannie Mae, Freddie Mac, and FHA.

Most of the hearing surrounded taxpayer exposure and the impact of GSE reform on the single-family housing market. Although the panelists and Committee members did not agree on a proposal to reform the GSEs, they all agreed that some sort of reform moving the mortgage market back to the private sector was necessary.

The panelists also were worried that if the transition of the mortgage assets held by the GSEs was too quick, there would be a firesale of the assets and their value would plummet, essentially creating a second recession. However, the panelists disagreed on what a reasonable transition time was. Alex J. Pollock, a Senior Fellow at the American Enterprise Institute, believed five years was a reasonable transition time. Deborah Lucas, the Associate Director of the Congressional Budget Office, and Sarah Rosen Wartell, the Executive Vice President for the Center for American Progress, believe any transition that takes place needs to be longer than five years to ensure the housing market is not negatively impacted.

Both Lucas and Wartell agreed there needs to be some form of government support to provide assistance in ensuring liquidity in the multifamily mortgage market incorporated into GSE reform. Wartell reminded the Committee that not every household could afford a home and the rental market needs to be available as a housing option. Lucas discussed the growing need for rental housing and was concerned that the development of additional rental housing supply had stagnated over the last few years.

For more information on the hearing, including witness testimonies and a full webcast, please visit: http://budget.house.gov/HearingSchedule/#622011

House Ways and Means Committee Holds Hearing on Corporate Tax Reform

On Thursday, the House Ways and Means Committee held a hearing on corporate tax and tax expenditure reform. Testimony was offered by individuals involved with the tax law, tax policy, utilities, health care, manufacturing, and retail industries.

Although all witnesses supported lowering the corporate tax rate, only Mark Stutman, the National Managing Partner of Tax Services for Grant Thornton, opposed eliminating business tax credits and tax expenditures. He believed eliminating tax expenditures may not improve effective business tax rates and could hurt domestic production activities, which may negatively affect economic growth and job creation.

No witness specifically discussed the low-income housing tax credit at the hearing.

For more information on the hearing, including witness testimonies, please visit: http://waysandmeans.house.gov/Calendar/EventSingle.aspx?EventID=242050

May 27, 2011

FY 2012 Budget Process Continues

On Wednesday, the Senate voted down four budget proposals: President Obama’s FY 2012 budget request, House Budget Chairman Paul Ryan’s (R-WI) “Path to Prosperity,” a proposal from Senator Pat Toomey (R-PA), and a proposal from Senator Rand Paul (R-TN). The vote was a conspicuous effort by Senate Democrats to exploit public opposition to the Republican’s plans to reform Medicare and encourage Republicans to compromise on deficit reduction levels and the debt ceiling.

Please find a summary matrix of all four proposals, as well as the President’s bipartisan Commission on Fiscal Reform and Responsibility proposal “The Moment of Truth”—which many of the budget proposals incorporate elements from—below. Please note, each proposal’s debt and deficit reduction numbers are based on their own assumptions and analyses.

	“The Moment of Truth” Report	President Obama’s FY 2012 Budget Request-Converted to S. Con. Res. 18	House Budget Chairman Paul Ryan’s (R-WI) “Path to Prosperity”- H. Con. Res. 34	Senator Rand Paul’s (R-TN) Budget Proposal- S. Con Res. 20	Senator Pat Toomey’s (R-PA) Budget Proposal- S. Con. Res. 21
Introduced	December 10	May 19	April 5	May 19	May 23
Status	Congress decided not to vote on these guidelines; however, several are included in other budget proposals.	House has not voted on, Senate has voted down.	House passed this proposal as its budget resolution on April 15. The Senate has voted this proposal down.	House has not voted on, Senate has voted down.	House has not voted on, Senate has voted down.
Time Period Covered	2012-2020	2012-2021	2012-2021. Claims budget would be balanced by 2040 if this plan if enacted and followed.	2012-2016. Claims budget balanced by this date.	2012-2021. Claims budget balanced by this date.
Total Spending	Reduce government spending below 22 percent of projected GDP by 2020.	Reduces government spending by $100 billion in FY 2012 from FY 2011 spending. However, spending increases in FY 2014 above FY 2011 levels.	Cuts government spending to below 20 percent of projected GDP by 2021, relative to the current baseline.	Cuts government spending to 17.9 percent of projected GDP by 2016, relative to the current baseline.	Cuts government spending to 18.5 percent of projected GDP by 2021, relative to the current baseline.
Total Deficit Reduction	Reduces deficit by 2.3% of GDP by 2015, $4 trillion by 2020.	Stabilizes deficit to 3 percent of the projected GDP by 2021, a reduction of $1.1 trillion in deficit spending based on current economic projections.	Bring the U.S. deficit under $1 trillion for FY 2012 and reduce the deficit by $4.4 trillion over the next decade, relative to the Obama Administration’s FY 2012 budget	Significantly decreases and eliminates spending deficits by 2016. Creates a surplus based on economic projections.	Significantly decreases and eliminates spending deficits by 2021. Creates a surplus based on economic projections.
Total Debt Reduction	Reduces debt to 60 percent of projected GDP by 2023 and 40 percent by 2035.	Following this budget would actually increase the debt by $5 trillion by 2016 and $11 trillion by 2021.	Reduces the debt by $4.7 trillion over the next decade, relative to the Obama Administration’s FY 2012 budget.	Reduces the debt by at least $2.3 trillion over the next five years, relative to the current federal debt.	Reduces the publicly held debt to approximately 52 percent of projected GDP by 2021, relative to the current baseline.
Changes to Social Security—Not included in budget resolution text but indicated in the budget assumptions	Makes retirement benefit formula more progressive. Provides an enhanced minimum benefit for low-wage workers. Enhances benefits for the very old and the long-time disabled. Gradually increases early and full retirement ages. Gives retirees more flexibility in claiming benefits and creates a hardship exemption for those who cannot work beyond 62.	No proposal.	Requires Congress and the President to develop a solution to growing Social Security costs.	No proposal.	No proposal.
Changes to Medicaid—Not included in budget resolution text but indicated in the budget assumptions	Directs the Centers for Medicare and Medicaid Services to develop an improved physician payment formula. Eliminate state taxes on Medicaid spending. Places dual eligibles in Medicaid managed care. Reduces funding for Medicaid administrative costs.	No proposal.	Reform Medicaid to become block grant program in which the federal government would send money to states, where governors would use the funding as they see fit.	Reform Medicaid to become a block grant program in which the federal government would send money to states, where governors would use the funding as they see fit.	Reform Medicaid to become block grant program in which the federal government would send money to states, where governors would use the funding as they see fit.
Changes to Taxes—Not included in budget resolution text but indicated in the budget assumptions	Reduces individual income tax rates. Reduces corporate tax rates by 10 percent. Would eliminate all tax expenditures and credits, including the LIHTC program.	Increases taxes for top two percent of the population. Does not reform the tax code.	Maintains Bush tax cuts for all income levels. Lowers corporate tax rate by 10 percent by broadening tax base. Lower rates achieved by “eliminating or modifying deductions, credits, and special carveouts that leave many companies paying no tax at all. LIHTC could be affected.	Maintains Bush tax cuts for all income levels. LIHTC could be affected.	Simplifies tax code and reduces corporate tax rates by 10 percent. Would eliminate all tax expenditures and credits. LIHTC could be affected. Initiates a territorial tax system.
Non-Security Discretionary Spending	Reduces non-security discretionary spending below FY 2008 levels for FY 2012, reduced non-security discretionary spending by $14 billion by 2015.	Freezes non-security discretionary spending at FY 2010 levels for FY 2012-FY 2017. Projections actually reduce non-security discretionary spending through 2015.	Reduces non-security discretionary spending below FY 2008 levels for FY 2012. Further reductions recommended beyond FY 2013.	Reduces non-security discretionary spending below FY 2008 levels for FY 2012. Further reductions recommended beyond FY 2013.	Reduces non-security discretionary spending below FY 2006 levels for FY 2012. Freezes spending for the next six years.
Income Security Account- Provides Budget Authority for Housing Programs	N/A	Decreases the Income Security budget authority by $70 billion over the next five years.	Decreases the Income Security budget authority by $160 billion over the next five years.	Decreases the Income Security budget authority by over $200 billion over the next five years.	Decreases the Income Security budget authority by $208 billion over the next five years.
Specific Housing Proposals—Not included in budget resolution text but indicated in the budget assumptions	No proposals.	Original February 14 budget request provides full funding for all Section 811 and 202 PRACS, housing choice vouchers, and project-based Section 8 contracts for FY 2012. Cuts some funding from new construction and rehabilitation programs. Continues to propose funding for the Transforming Rental Assistance and Choice Neighborhoods initiatives.	Recommends reforming the Federal housing assistance programs to cuts costs and impose time limits on occupancy.	Eliminates all housing programs and the Department of Housing and Urban Development.	None specified.
Additional Issues—Not included in budget resolution text but indicated in the budget assumptions	Consolidates duplicative federal programs and reduces government inefficiencies and improper payments. Reduces the size of the federal government and sells excess property. Eliminates earmarks.	Focuses on additional proposals to improve education, innovation, and infrastructure.	Consolidates duplicative federal programs. Reduces the size of the federal government and sells excess property. Eliminates earmarks and improper payments in government programs through anti-fraud measures. Wind down Fannie Mae and Freddie Mac. Repeal the Obama Health Care bill.	Reduces the size and cost of the federal government and sells excess property. Eliminates improper payments in government programs. Repeals Davis-Bacon.	Reduces mandatory spending levels below FY 2007 appropriations by 2014. Repeal the Obama Health Care bill.

In addition, the White House’s bipartisan group of Congressional leadership, led by Vice President Joe Biden, is still in talks about deficit and debt reduction strategies. President Obama has asked this group to devise a strategy to reduce $4 trillion from the federal debt over the next decade and encouraged them to use the guidelines set forth in the “The Moment of Truth” report.

President Obama has also asked the group to keep domestic spending low, reduce military spending, decrease health care spending without affecting low-income families and seniors, and reform the tax code as part of their efforts. Unlike the House Budget Committee’s proposal, President Obama would also allow the tax cuts for the wealthiest two percent of American households expire.

So far, Congressional leaders and White House officials have agreed that any vote on the debt ceiling or budget would need to contain spending reduction targets, cuts/caps for annual appropriations, and cuts/caps for farm subsidies and other mandatory programs in order to pass Congress. They have also agreed that any deal on raising the debt ceiling would defer contentious decisions about Medicare, Medicaid and taxes—issues that are central to both Chairman Ryan and Chairman Conrad’s FY 2012 budget resolutions—until after the 2012 elections.

The Biden group discussions are ongoing.

Draft Legislation: FY 2012 Agriculture Appropriations

On Tuesday, the House Appropriations Agriculture Subcommittee approved their draft legislation for the FY 2012 appropriations. The FY 2012 appropriations legislation cuts funding to every rural multifamily housing program and eliminates the Section 538 program.

Proposed FY 2012 funding USDA-RHS multifamily programs is as follows:

Rural Rental Assistance: $890 million

FY 2012 Budget Request: $907 million
FY 2011 Appropriation: $956 million

Section 515 Housing Direct Loans: $58.6 million

FY 2012 Budget Request: $95 million
FY 2011 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $0

FY 2012 Budget Request: $0
FY 2011 Appropriation: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans

Multifamily Housing Revitalization Program: $11 million for housing vouchers

FY 2012 Budget Request: $16 million for housing vouchers
FY 2011 Appropriation: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

For information on contacting your Congressional Representatives, please click here: http://house.gov/htbin/findrep?ZIP=

House GOP Releases “Plan for America’s Job Creators”

This week, the House Republicans released a new growth plan, the “Plan for America’s Job Creators.” The plan included some previously outlined Republican ideas, including a reduction in federal regulatory efforts, comprehensive tax reform, advancing free trade, and paying down the debt and deficit through spending cuts. Although Republicans have presented these proposals individually before, this is the first time they have been brought together in a comprehensive package.

Of interest to NAHMA members are the GOP’s proposals for tax reform and spending cuts in this plan. The “Plan for America’s Job Creators” would reduce spending by $6 trillion over the next decade, reform the individual tax code, and reduce the corporate tax rate to 25 percent. It would also eliminate special interest tax breaks; however, the tax breaks to be eliminated were not specified by the plan. NAHMA is not clear whether the LIHTC is on the table but we will work to ensure that it is not reduced or eliminated if the proposal moves forward.

No other details on tax reform or spending reduction were provided by the plan.

Democrats and the White House have already come out against several proposals included in the “Plan for America’s Job Creators.” Deficit and debt reduction talks between the Congress and the White House are ongoing. No agreements are expected to be reached before July.

For a copy of the “Plan for America’s Job Creators” please visit: http://www.majorityleader.gov/Jobs/HRP_JOBS.pdf

House Financial Services Housing Subcommittee Holds Hearing on FHA and RHS Proposals

On Wednesday, May 25 the House Financial Services Housing, Community Opportunity, and Insurance Subcommittee held a hearing on draft legislation that would increase the FHA mortgage capital ratios and down payments and move RHS to HUD. Republicans supported both proposals while Democrats opposed the FHA changes and RHS transfer.

Katherine Alitz, the Senior Vice President, Boston Capital, testified before the Subcommittee on behalf of the Council for Affordable and Rural Housing (CARH). She said that CARH believed the committee needed to have more discussion and analysis on the RHS transfer to HUD before seriously considering it as a streamlining option. Barry Rutenberg the First Vice Chairman of the National Association of Home Builders (NAHB) and Peter Carey, the President and CEO of Self-Help Enterprises who was testifying on behalf of the Housing Assistance Council and the National Rural Housing Coalition, said their organizations opposed to transfer of RHS to HUD. They believed the transfer would not streamline or improve services because HUD was not set up to deliver programs to small rural areas and would not be serious in administering the program.

Rutenberg, Chairman of the Mortgage Bankers Association Michael Berman, Moran & Company Partner Peter W. Evans—testifying on behalf of the National Multi Housing Council and the National Apartment Association—, and Phipps Realty President Ron Phipps—testifying on behalf of the National Association of Realtors—all opposed the increase in the down payment for FHA mortgaged. Most of the witnesses also opposed the increase in the FHA capital ratios. They believe these options would negatively affect the multifamily mortgage market because there were so few sources of private financing available for multifamily housing. They also supported raising the loan limits for multifamily properties. Berman also commented that, although some private capital was returning to the market, the multifamily sector was still reliant on FHA, Fannie Mae, and Freddie Mac for their mortgages.

For copies of the witnesses testimony and the archived webcast of this hearing, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=241957

House Financial Services Capital Markets Subcommittee Hold Hearing on New GSE Reform Proposals

On Wednesday, May 25 the House Financial Services Capital Markets and GSE Subcommittee held a hearing to discuss additional proposals to reform Fannie Mae and Freddie Mac. The most concerning proposal to NAHMA was offered by Congressman Ed Royce (R-CA), which would eliminate the National Housing Trust Fund (NHTF). Royce believed the Fund should never come into existence and eliminating it was the best way to ensure money did not flow to groups that were lobbying for weaker lending standards.

Congresswoman Maxine Waters (D-CA) criticized Royce’s bill saying the Fund was never capitalized, therefore no fraud or inefficiencies had been had in the Fund yet. She also asked her colleagues what they suggested should replace the Fund to help growing worst case housing needs in America.

Acting Director of the Federal Housing Finance Agency Ed DeMarco said he would not approve contributions to the Fund while the GSEs were still in conservatorship. He made no comments in support or opposition to the Royce bill. However, he did state that he was looking to liquidate Fannie Mae and Freddie Mac’s non-core assets more quickly than 10 percent per year and was working on a suitable elimination plan.

President of the National Low-Income Housing Coalition Dr. Sheila Crowley opposed the proposal to eliminate the NHTF. She said there was no existing program at the federal level targeted to increasing affordable rental housing for low-income households.

David John, the Senior Research Fellow in Retirement Security and Financial Institutions for the Heritage Foundation, called the NHTF “ridiculous” and recommended that all housing policy goals and programs to be incorporated into HUD. He felt contributions from the GSEs were an inappropriate way to provide support to low-income housing programs and encouraged Congress to do so through the regular appropriations process. Dr. Anthony Sanders, a Mercatus Center Senior Scholar and Professor of Real Estate Finance at George Mason University, also agreed the NHTF should not receive funding from Fannie Mae and Freddie Mac and requested that Congress have a broader discussion on public contribution to affordable housing goals.

For copies of the witnesses testimony and the archived webcast of this hearing, please visit: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=241959

Senate Banking Housing Subcommittee Holds Second Hearing on Housing Finance Reform

Yesterday, the Senate Banking Committee held a hearing on proposals for the housing finance system. During the hearing Chairman Tim Johnson (D-SD) announced the Committee will hold several more hearings on the housing finance system before drafting any legislative proposals.

Testimony was offered by: Mr. Ron Phipps, President, National Association of Realtors; Mr. Mark Parrell, Executive Vice President and Chief Financial Officer, Equity Residential, on behalf of the National Multi-Housing Council and National Apartment Association; Mr. Greg Heerde, Managing Director, Aon Benfield; and Mr. Barry Rutenberg, First Vice Chairman of the Board, National Association of Home Builders.

For copies of the witnesses testimony and the archived webcast of this hearing, please visit: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=92d9d2fb-7648-4389-a362-856adf298b22

May 20, 2011

Washington Post Launches Report on HOME Funding

A series of front-page articles run this week in The Washington Post reporting on alleged mismanagement of HUD’s HOME funds has raised alarms throughout the affordable housing industry, HUD and Congress. The articles described HOME projects that were never completed and/or never begun. The reporter described in detail how developers and nonprofits allegedly received HOME funds but did not provide the promised housing, and attributed the problems to lax oversight on the part of housing agencies in awarding the funds and monitoring the projects. The reporter also noted several times that HUD does not have authority to compel repayment of HOME funds.

Although the alleged failed deals which were the subjects of the articles represent a small percentage of the HOME portfolio, they have already trigged bipartisan calls for congressional investigations. The timing of the articles comes at a time when HOME was already facing the possibility of severe cuts for the FY 2012 appropriations cycle.

NAHMA believes it is important to remind Congress that HOME is a successful program that has helped provide quality apartment communities for thousands of families across the country. To succeed in this effort, we need your help.

Specifically, we would like to ask that members:

Send NAHMA examples of your successful projects developed using HOME funds, with location, photographs and other details.
Invite your Congressmen to visit your successful HOME projects when they are in their district.

We believe timing is important – to counter the negative perceptions on the HOME program as soon as possible – so we would ask that you send your information to NAHMA staff member Lauren Eardensohn, at Lauren.Eardensohn@nahma.org, as soon as possible, or by May 30, and to follow up with your Congressmen in that time frame as well.

We have also set up an urgent grassroots action webpage for the HOME program at: http://www.nahma.org/content/grassroots_HOME_Program.html

Again, please send any examples, pictures, etc of HOME projects to NAHMA staff by COB Tuesday May 30.

For a copy of the Washington Post investigative report and articles, please visit: http://www.washingtonpost.com/investigations/special-reports/HUD-funding/

FY 2012 Budget and Debt Limit Update

This week, the United States hit the $14.3 trillion debt limit; however, Treasury believes they have enough tax receipts and Treasury securities from the Civil Service Retirement and Disability Fund and Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan to meet their payment obligations and delay exceeding the debt limit until August 2.

Congress has two and a half months to vote for a $1.5 trillion increase in the debt limit or else the United States will default. According to Treasury, failure to due so could preempt another financial crisis and threaten the American jobs and savings accounts. However, the debt limit vote in Congress has become complicated because many Members of Congress are insisting the vote be tied with a long-term deficit reduction plan. This is made even more difficult because bipartisan talks on long-term spending reductions are currently stalled.

In fact, Senator Tom Coburn (R-OK) of the Senate’s bipartisan “Gang of Six” has walked away from the group’s deficit reduction talks over his request for additional cuts to Medicare. Senator Coburn was also frustrated by the group’s decision to let the relevant House and Senate Committees take the lead on domestic spending reduction and tax reform. Senator Saxby Chambliss (R-GA) is expected to take up the Republican lead in the ongoing negotiations within the “Gang of Six.”

Senator Coburn also announced he was working on his own proposal to achieve $9 trillion worth of cuts over 10 years, slashing domestic spending and reforming the tax code, including eliminating tax deductions, more than twice the amount of cuts endorsed by the President Obama’s National Commission on Fiscal Responsibility and Reform.

Senate Budget Committee Chairman Kent Conrad (D-ND), also a member of the “Gang of Six,” has decided to delay introducing a budget resolution for Committee consideration in order to focus on additional deficit reduction talks.

NAHMA will keep members informed as the situation develops.

New GSE Bills from House Financial Services Committee

House Financial Services Capital Markets and GSE Subcommittee Chairman Scott Garrett (R-NJ) plans to introduce another slew of housing reform bills to dismantle Fannie Mae and Freddie Mac in the coming weeks. The bills are Chairman Garrett’s second round of measures to reform the government-sponsored enterprises (GSE).
While details on the bills are limited, we do know the bills would include provisions to:

Limit the risks and costs of taxpayer-subsidized mortgages;
Set a bailout cap for Fannie and Freddie;
Forbid GSEs from reducing payments to Treasury for the bailout;
Force Fannie and Freddie to divest of any assets that do not directly support its mission of keeping mortgage credit flowing; and
Abolish the Affordable Housing Trust Fund.

The legislation to abolish the Housing Trust Fund is expected to be extremely controversial within the Committee. NAHMA opposes any effort to abolish the Housing Trust Fund.
The bills could be introduced in the House as early as next week. Chairman Garret plans to hold two hearings on legislative proposals for housing finance and GSE reform on Wednesday May 25. More information on the hearings can be found at: http://financialservices.house.gov/Calendar/?EventTypeID=309

H.R. 1859: Housing Finance Reform Act of 2011

Reps. John Campbell (R-CA) and Gary Peters (D-MI) have introduced a more moderate, bipartisan approach to GSE reform. The legislation would require the Federal Housing Finance Association to wind down Fannie Mae and Freddie Mac and replace the GSEs with a system of new system of private housing finance guarantee associations with limited charters. The associations could not originate or service mortgages, issue securities backed by anything other than residential mortgage products guaranteed by the government, and would be limited in their investment activities.

The new system would also provide an explicit government guarantee for mortgage securities in exchange for a fee. The Government Accountability Office (GAO) would be tasked with investigating the actual risk associated with the new guarantee fee would be.

Finally, the bill would preserve access to the 30 year fixed rate mortgage by providing a government guarantee to investors in residential mortgage backed securities.

The bill has been referred to the House Financial Services Committee. However, the Capital Markets and GSE Subcommittee Chairman Garrett has announced he does not support this bill.

Upcoming Congressional Hearings

On Tuesday, May 24 the Senate Banking Committee will hold a hearing on proposals for the housing finance system at 10 AM EST. Information on the hearing may be found here: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=92d9d2fb-7648-4389-a362-856adf298b22

On Tuesday, May 24 the House Appropriations Transportation-HUD Subcommittee will hold a hearing featuring testimony from HUD Community Planning and Development Assistant Secretary Mercedes Marquez at 2PM EST. We expect the Subcommittee will be discussing the HOME Program in-depth during this hearing. Information on the hearing may be found here: http://appropriations.house.gov/index.cfm?FuseAction=Hearings.Detail&HearingId=129&Month=5&Year=2011

On Wednesday, May 25 the House Financial Services Housing, Community Opportunity, and Insurance Subcommittee will hold a hearing to discuss legislative proposals for to determine the future role of FHA, RHS and GNMA in the single-and multi-Family mortgage markets at 10 AM EST. Information on the hearing may be found here: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=241957

On Wednesday, May 25 the House Financial Services Capital Markets and GSE Subcommittee will hold a hearing to discuss additional proposals to reform Fannie Mae and Freddie Mac at 2 PM EST. Information on the hearing may be found here: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=241959

May 13, 2011

FY 2012 Appropriations

This week, the Republican-led House Appropriations Committee unveiled the topline funding levels called the 302(b) allocation, for each of the 12 spending bills for FY 2012. The Committee has recommended reducing non-military, discretionary spending allocations by $56 billion, while increasing proposed Defense allocations by $17 billion.

Most disturbing, however, were the large reductions to the Transportation-HUD budget allocations, a decrease of $7.7 billion below the FY 2011 appropriations legislation and $27 billion from President Obama's FY 2012 budget request. The House Appropriations T-HUD Subcommittee plans to mark up the spending bill on July 14. NAHMA believes the Subcommittee plans to include significant cuts to affordable housing new construction and rehabilitation programs, like CDBG and HOME. There is a possibility the Subcommittee may also cut new construction funding from Section 202 and Section 811 accounts. Based on the FY 2011 appropriations levels and conversations with House Appropriations Committee staff, NAHMA does believe there is a high likelihood that the FY 2012 appropriations legislation will contain full funding for Section 202 and 811 PRACs and tenant-based and project-based Section 8 12-month contracts.

The Agriculture spending allocation for FY 2012 was $2.7 billion below the FY 2011 appropriations and $5 billion below the President's FY 2012 budget request. The House Appropriations Agriculture Subcommittee plans to mark up the spending bill on May 24. We are unsure of what the impact on RD housing programs and rural rental assistance contracts might be. There is a strong possibility the Subcommittee may follow President Obama's FY 2012 budget request to either cut or eliminate funding for the Section 538 guaranteed loan program.

In House Appropriation Committee Chairman Hal Rogers's (R-KY) press release he stated “Many of these cuts will not win any popularity contests, but these types of reductions are imperative to overcoming our unparalleled fiscal crisis."

House Appropriations Committee Ranking Member Norm Dicks (D-WA) said the cuts were extreme and will hurt the nation's economy and its most vulnerable citizens.

For a copy of the full 302(b) spending allocation breakdown, please visit: http://republicans.appropriations.house.gov/_files/51111FY2012SubcommitteeAllocations302bs.pdf

NAHMA will continue to work with Congressional appropriators to protect funding for affordable multifamily housing programs in the FY 2012 appropriations. We encourage our members to contact their Congressional Representatives and let them know you support:

Full funding for all rental assistance programs, including:

All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and

Continued funding for new construction under the Section 202 and Section 811 programs.

Debt Limit and Deficit Reduction Update

This week, Congressional leadership met once more with the White House to discuss debt and deficit reduction strategies, which will likely be tied to the debt limit vote. Republicans have said they want trillions in cuts and would not support raising taxes to reduce the deficit. Democrats have called for new revenues to spread the pain of deficit reduction across the budget. The White House and Office of Management and Budget have prepared a list of recommended cuts, totaling $300 billion; however, this list was not publically available at press time.

In addition, Speaker of the House John Boehner (R-OH) announced this week that he will not support any debt limit increase unless it is accompanied by at least $2 trillion in spending reductions. The Speaker also refused to take Medicare reform off the table for FY 2012 budget discussion. Democrats have rejected this approach.

Treasury has estimated the United States will exceed the current debt limit on or around August 2. Congress has two and a half months to vote for a $1.5 trillion increase in the debt limit or else the United States will default on their payment obligations. Because discussions on the debt limit vote are ongoing, NAHMA will keep members informed as new information becomes available.

White Papers Detail Fannie Mae's Involvement in the Multifamily Rental Market

Last week, Fannie Mae released two white papers detailing their involvement in the multifamily rental housing market.

The first white paper, “Fannie Mae and Workforce Rental Housing”, describes the increasing need for affordable rental housing. The study found that about 14 million of the estimated 17 million rental housing units across the nation are considered affordable to people earning less than their local AMI – where rent payments comprise no more than 30 percent of income. Most multifamily units also offer a mix of rental units—unsubsidized and subsidized—and a variety of rent levels in their localities. The Fannie Mae paper also found that rental housing affordable to lower-income households increasingly is in short supply, especially in certain more high- density metropolitan areas, such as Washington, DC and New York City, which the mortgage market meltdown and economic crisis have exacerbated. Furthermore, the financial crisis has pushed most private investors out of the multifamily mortgage market, despite the strength and profitability of the multifamily mortgage portfolio. Now, Fannie Mae, Freddie Mac, and the Federal Housing Administration are the primary multifamily financers today.

The paper elaborated on Fannie Mae’s position in the multifamily financing market—its share of overall multifamily mortgage debt outstanding stood at 20 percent, or $168.9 billion, as of the second quarter of 2010. Freddie Mac’s share was 11.2 percent. Typically, 90% of Fannie Mae's multifamily financing supports rental housing that is affordable to households earning at or below their area's median income level.

The second paper, “Fannie Mae's Role in the Small Multifamily Loan Market,” discusses the GSE’s roll in loans to apartment buildings with five to 50 units, which are up to $3 million in most markets and $5 million in high cost areas.

Fannie Mae’s small multifamily loan portfolio was $34 billion in 2010, most of which supported affordable units in urban areas close to transportation and jobs. According to the Mortgage Bankers Association, small loans made up 27 percent of the multifamily loan market in 2009. Fannie Mae’s market share of small loans was about 15 percent of the market in 2009. The white paper also found that small loan market was rather fragmented—over 2,600 lenders participate in the small loans market, originating an average of six small loans each.

To read Fannie Mae and Workforce Rental Housing, please click here: https://www.efanniemae.com/mf/refmaterials/pdf/wpworkhouse.pdf

To read Fannie Mae's role in the Small Multifamily Loan Market, please click here: https://www.efanniemae.com/mf/refmaterials/pdf/wpmfloanmkt.pdf

S. 945: Consolidating Duplicative and Overlapping Government Programs

This week, Sens. Tom Coburn (R-OK) and Mark Warner (D-VA) introduced legislation that would consolidate duplicative and overlapping government programs, as identified by the Government Accountability Office (GAO) Study “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue” (March 2011). Under the legislation, the Office of Management and Budget (OMB) would have the authority to eliminate, consolidate, and streamline government programs and agencies with overlapping missions as identified by the GAO report for a savings of at least $5 billion, which would be applied toward deficit reduction.

The GAO report provides Congress with a blueprint of duplicative programs and recommendations for program consolidation, as well as options to improve government cost-savings. For the most part, the report focuses on defense, economic development, homeland security, and social services overlapping programs. Very few of the reports recommendations would directly affect USDA-RHS and HUD’s affordable housing programs. They include:

Better data sharing on tax credit benefits between HUD and RHS to better assess the programs’ impacts;
Better coordination and streamlining of homelessness assistance;
Improving the cost-effectiveness and enhance services for transportation-disadvantage persons through inter-agency cooperation; and
Improving efforts to address improper payments made in government agencies.
Mostly for Medicaid, Medicare, and unemployment insurance. No housing program or agency made the top 10 list ($1 billion or more) for improper payments in 2010.

The text of S. 945 is available here: http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=ac1e8fb8-99bf-4db3-8367-ad840aee6e32

The full GAO report is available here: http://www.gao.gov/new.items/d11318sp.pdf

May 6, 2011

Senate Banking Hearing on HUD’s FY 2012 Legislative Proposals

Yesterday, the Senate Banking Committee held a hearing on HUD’s FY 2012 Legislative Proposals, with testimony offered by HUD Secretary Shaun Donovan.

Senate Banking Committee Chairman Tim Johnson (D-SD) discussed the recent increases in worst case housing needs and the decrease of affordable rental housing. He called on the Committee and the Obama Administration to increase the value per dollar of housing programs, especially considering the current budget environment. Chairman Johnson was extremely concerned that additional cuts to HUD programs would halt the progress made in recent years to help American’s most vulnerable citizens.

During Secretary Donovan’s testimony, he discussed the need to pass the Section 8 Voucher Reform Act (SEVRA) and enact HUD’s Choice Neighborhoods and Transforming Rental Assistance initiatives. He believed these programs would help HUD reduce inefficiencies and support struggling neighborhoods.

Chairman Johnson asked how HUD was protecting the integrity of the multifamily loan program, since its portfolio has quintupled in the last few years. Donovan discussed how HUD has been instrumental in ensuring the multifamily mortgage market had access to FHA loans during the housing crisis. In recent years, HUD has also provided a number of similar monitoring tools that already exist in FHA’s single family portfolio to its multifamily mortgage portfolio, including the creation of the chief risk officer position to monitor defaults and delinquencies in the portfolios. HUD has also changed the multifamily underwriting criteria, specifically the loan to value rations, in order to improve the performance of the program. Donovan also noted that the multifamily mortgage market is rather profitable and it did not contribute to the government sponsored entities (GSE) Fannie Mae and Freddie Mac’s downturn during the housing crisis. Donovan also discussed how increasing the FHA loans for multifamily projects has helped address the worst case rental needs issue.

Ranking Member Richard Shelby (R-AL) was concerned by a CATO Institute estimate that stated the amount of money HUD used on rental subsidies could pay for the rents of all households making under $22,000. He asked Secretary Donovan how he planned to increase the efficiency and lower the cost of rental subsidy programs. Donovan replied that there were too many programs with many conflicting rules and HUD was using outdated technology to process and oversee them. He called on the Committee to pass SEVRA, which would enact targeted income recertifications, which would reduce the operating cost by a few hundred million dollars. He said that the provisions of SEVRA HUD included in their FY 2012 budget request would create $1 billion in savings over the next five years and help residents in rural areas. Donovan also discussed the broad support for the legislation. Donovan also talked about how HUD’s Transformation Initiative efforts to improve technology and IT systems would help reduce fraud in the programs.

A copy of Secretary Donovan’s testimony and an archived webcast of the hearing may be found here: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=d8151cfa-d28b-4045-bca0-1e701f9432dc

FY 2012 Budget and Debt Limit Update

On Tuesday, Senate Budget Committee Chairman Kent Conrad (D-N.D.) presented his FY 2012 budget outline—the Democrat’s alternative plan to House Budget Committee Chairman Paul Ryan’s “The Path to Prosperity”—to the Senate Budget Committee.
Although few details on the plan are available, Chairman Conrad is pushing to cut $4 trillion from future deficits over the next 10 to 12 years. However, there is disagreement between Republicans and Democrats on how to achieve that goal.
Chairman Conrad has tentatively agreed to broaden the tax base and allow for some tax rate reductions, which is expected to generate $1 trillion in new revenues. Both House Republicans and Senate Democrats agreed to leave the existing Medicare program alone for the moment.

Congress also must face the daunting task of raising the debt ceiling by $1.5 trillion before the August recess. Right now, Treasury projects the United States will hit their debt ceiling of $14.3 trillion in the next two weeks. Treasury believes they have enough tax receipts to meet their obligations and delay exceeding the debt limit until August 2.

During a deficit and debt reduction meeting hosted by Vice President Joe Biden yesterday, House and Senate legislators and White House officials agreed that any vote on the debt ceiling would need to contain spending reduction targets, cuts/caps for annual appropriations, and cuts/caps for farm subsidies and other mandatory programs in order to pass Congress. They have also agreed that any deal on the debt ceiling would defer contentious decisions about Medicare, Medicaid and taxes until after the 2012 elections.

A vote to raise the debt limit could come as early as mid-May.

Moderate Democrats Release Housing Market Reform Principles

Last week, moderate House Democrats in the New Democrat Coalition announced their proposal to reform the housing finance market. The proposal adheres to the Obama Administration’s third housing finance reform option—a privatized system of housing finance with FHA, USDA and Department of Veterans’ Affairs assistance for low- and moderate-income borrowers and catastrophic reinsurance behind significant private capital.

Although the details of the proposed legislation are still being finalized, the New Democrat Coalition has agreed to the following principals:

Creating a primarily private market with minimal but key government backstops;
Diminishing the roles of Fannie Mae and Freddie Mac; and
Ensuring affordable access to a 30-year, fixed-rate mortgage and multifamily housing.

The New Democrat Coalition believes their proposal will act as a starting point for further debate on this issue. The Democrats also plan to include a fee for mortgage backed securities in order to guarantee the assets backing the securities, but not the entities, and support the 30-year mortgage and the secondary mortgage market.

The House Financial Services Committee is expected to mark up the eight housing finance reform proposals in the coming weeks that were passed by the Capital Markets and GSE Subcommittee last month. The Democrats hope to offer their legislation as a substitute amendment to one of the bills.

New Report on America’s Rental Housing Market Released

Last week, the Joint Center for Housing Studies of Harvard University released a new report titled America's Rental Housing: Meeting Challenges, Building on Opportunities.

This report studied the affordability problems facing renters and found that one in four renters, or 10.1 million households, spend more than half their income on rent and utilities while another quarter of renters spend between 30-50 percent of their income on rent and utilities. These numbers provide a striking illustration of the steadily worsening housing affordability problem. The report also offers a thorough discussion of the demographic, political and market challenges for rental housing.

A copy of the full report may be found here: http://www.macfound.org/atf/cf/%7BB0386CE3-8B29-4162-8098-E466FB856794%7D/AMERICASRENTALHOUSING-2011.PDF?ct=9334969&utm_source=pubaff&utm_medium=email&utm_content=affordablehousing&utm_campaign=2011-04_enews

The report was released at an event held at the Newseum in Washington, D.C., which included a keynote address from HUD Secretary Shaun Donovan. Numerous housing advocates were in attendance, including NAHMA staff. During a question and answer session, Secretary Donovan discussed the possibility of revamping the LIHTC and expanding the Community Reinvestment Act, which prods banks to make loans in low-income communities. The Secretary lauded the LIHTC, pointing out that it had stimulated affordable housing construction across the nation. However, Secretary Donovan also pointed out that tax break had become the third-largest corporate tax deduction.

April 15, 2011

H.R. 1473: Department of Defense and Full Year Continuing Appropriations Act 2011

On Thursday, both the House and Senate passed the FY 2011 full-year continuing resolution (CR), which House and Senate leadership and the White House negotiated last week. Under H.R. 1473, all programs are funded at FY 2010 levels for the remainder of FY 2011 levels unless otherwise specified. The bill provides reduces funding by $38.5 billion for FY 2011 when compared to current spending levels.

The FY 2011 CR provides full-funding for tenant-based Section 8 and project-based Section 8 rental assistance contracts, as well as Section 202 and 811 PRACs. However, the CR would cut funding for capital advances for new construction/rehabilitation programs like CDBG, HOPE VI, HOME, and Section 202 and 811. Proposed funding in the FY 2011 CR for HUD multifamily programs is as follows:

Tenant-Based Section 8: $18.4 billion (total); $16.7 billion (contract renewals), which includes an advanced appropriation of $4 billion for FY 2012; and $35 million for Section 811 vouchers

FY 2011 Budget Request: $19.6 billion (total); $17.3 billion (contract renewals)
FY 2010 Appropriation: $18.2 billion (total); $16.339 billion (contract renewals)

Project-Based Section 8: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.

FY 2011 Budget Request: $9.4 billion total; $9.04 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding level (full-funding for all contract renewals was determined to be lower in mid-2010);
FY 2010 Appropriation: $8.5 billion (total); $8.325 billion (contract renewals); $393 million as an FY 2011 Advanced Appropriation included in the total funding level

Section 202: $400 million; $300 for PRAC renewals and Service Coordinators, $100 million for capital advances

FY 2011 Budget Request: $274 million
FY 2010 Appropriation: $825 million

Section 811: $150 million; $68 million for PRAC renewals, $50 million for capital advances, and $32 for renewal of tenant-based rental assistance contracts

FY 2011 Budget Request: $90 million
FY 2010 Appropriation: $300 million

Transforming Rental Assistance (TRA): $0

FY 2011 Budget Request: $300 million
FY 2010 Appropriation: n/a

HOPE VI: $100 million

FY 2011 Budget Request: $0
FY 2010 Appropriation: $200 million; up to $65 million for the Choice Neighborhoods demonstration program

Choice Neighborhoods: $0

FY 2011 Budget Request: $250
FY 2010 Appropriation: Up to $65 million from the HOPE VI account for the Choice Neighborhoods demonstration program

HOME: $1.61 billion

FY 2011 Budget Request: $1.65 billion
FY 2010 Appropriation: $1.825 billion
CDBG: $3.5 billion; $3.34 billion for grants
FY 2011 Budget Request: $4.38 billion; $3.99 billion for grants
FY 2010 Appropriation: $4.45 billion; $3.99 billion for grants

LEP: $500,000

FY 2011 Budget Request: $0
FY 2010 Appropriation: $500,000

Affordable Housing Trust Fund: $0

FY 2011 Budget Request: $1 billion
FY 2010 Appropriation: n/a

The FY 2011 CR cuts funding to every rural multifamily housing program, except Section 515 which is flat-funded. Proposed funding in the FY 2011 CR for USDA-RHS multifamily programs are as follows:

Rural Rental Assistance: $956 million

FY 2011 Budget Request: $966 million
FY 2010 Appropriation: $980 million

Section 515 Housing Direct Loans: $69.5 million

FY 2011 Budget Request: $95 million
FY 2010 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $30.9 million; $3 million of this is set aside for multi-family housing guaranteed loans

FY 2011 Budget Request: $129 million, no interest subsidies included
FY 2010 Appropriation: $129 million, no interest subsidies included

Multifamily Housing Revitalization Program: $30 million; $14 million for vouchers, $15 million for the demonstration program, and $1 million for loans to non-profits

FY 2011 Budget Request: $18 million for housing vouchers
FY 2010 Appropriation: $43.2 million; $16.4 million in vouchers, $25 million for the demonstration program, and $2 million for non-profit loans

For a full copy of the FY 2011 CR, click here: http://rules.house.gov/Media/file/PDF_112_1/Floor_Text/FINAL2011_xml.pdf

For a summary of the FY 2011 CR, please click here: http://appropriations.house.gov/_files/41211SummaryFinalFY2011CR.pdf

A list of cuts made by the FY 2011 CR may be found here: http://appropriations.house.gov/_files/41211Finalprogramcuts.pdf

Both USDA-RHS and HUD have confirmed that the funding provided by these bills should be enough to fulfill all tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance contracts for FY 2011. Nevertheless, NAHMA is extremely concerned by the significant cuts to the new construction and rehabilitation programs, which are critical to help meet the growing need for affordable housing nationwide. These new construction and rehabilitation programs are often used in conjunction with the low-income housing tax credit (LIHTC) to complete development and rehabilitation deals. A NAHMAnalysis on the FY 2011 CR is forthcoming.

President Obama is expected to sign the legislation into law today.

FY 2012 Budget

Today, the House is expected to vote on H. Con. Res. 34, which establishes the Federal budget for FY 2012 and sets us the budgetary levels for FY 2013-2021. The resolution contains the budgetary reduction strategy set forth in House Budget Committee Chairman Paul Ryan’s (R-WI) “Path to Prosperity” FY 2012 budget proposal unveiled last week. The Chairman believes by following this proposal set forth in H. Con. Res. 34 Congress could cut $6.2 trillion in government spending over the next decade compared to the President’s budget and $5.8 trillion relative to the current-policy baseline.

The House resolution is a blue print for spending in FY 2012. It is unlikely that the Senate will also adopt this resolution. The resolution, if adopted by the House, does not require the President’s approval nor does it become law.

H. Con. Res. 34 would significantly decrease the Income Security budget authority, by $160 billion in cuts, over the next five years. The Income Security account contains the budget authority for HUD’s and USDA-RHS’s affordable housing programs, welfare programs including food and nutrition assistance and Temporary Assistance for Needy Families, unemployment compensation, disability and retirement insurance, and energy assistance. The resolution proposes reducing the Income Security budget authority by $90 billion between FY 2011 and FY 2012. The Income Security budget authority would be reduced by another $70 billion between FY 2012 and FY 2015 before leveling out through FY 2021.

On Wednesday, President Obama offered a bipartisan alternative to the House Budget Committee Republicans’ “Path to Prosperity” proposal. He has asked Sens. Mark Warner (D-VA), Saxby Chambliss (R-GA), Tom Coburn (R-OK), Mike Crapo (R-ID) Kent Conrad (D-ND), and Richard J. Durbin (D-IL) to help develop a plan to reduce the debt and deficit over the next 10 years. The plan, based on “The Moment of Truth” report issued by the President’s bipartisan Commission on Fiscal Responsibility and Reform last December, would cut about $4 trillion from the debt over the next decade. The plan would keep domestic spending low, reduce military spending, decrease health care spending without impacting low-income families and seniors, and reform the tax code. Unlike the House Budget Committee’s proposal, this plan would also allow the tax cuts for the wealthiest two percent of American households expire.

NAHMA is concerned about the potential tax reform this bipartisan group of Senators may propose. “The Moment of Truth” report proposed eliminating all corporate tax loopholes, including several tax credits that help finance affordable housing development and rehabilitation, like the LIHTC. If this turns out to be the case, Obama’s new budget plan would contradict his FY 2012 Treasury budget request that supports the LIHTC programs and calls for reforms to make it easier to use for preservation deals and allow for lower-income households to take advantage of tax credit properties. There is generally wide-spread support for the LIHTC in the Senate. We will continue working to educate Senators on the importance of the LIHTC in affordable housing construction and preservation.

NAHMA will continue to work with Congressional authorizers and appropriators to protect affordable multifamily housing programs going forward. We encourage our members to contact their Congressional Representatives and let them know you support funding for affordable housing programs and preserving programs that successfully provide quality affordable housing to low-income Americans, like the LIHTC and project-based Section 8.
If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm
If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

April 11, 2011

FY 2011 Continuing Resolution

Late Friday night, House Speaker John Boehner (R-OH), Senate Majority Leader Harry Reid (D-NV), and President Obama came to an agreement on appropriations for the remainder of FY 2011, averting a government shutdown at the 11th hour. The negotiated legislation would cut about $39 billion from current spending levels and would not include a policy rider blocking federal funding for Planned Parenthood. Major sticking points during the negotiations were the amount of cuts—Republicans were pushing for at least $40 billion—and the Planned Parenthood policy rider.

Appropriators have not yet made the negotiated legislation public. NAHMA will send Executive Members a summary of the funding levels for the remainder of FY 2011 when they become available.

Both the House and Senate passed H.R. 1363, the Department of Defense and Further Additional Continuing Appropriations Act, extending the current continuing resolution through April 14 in order to give Congress enough time to draft and vote on the negotiated legislation. This legislation cuts over $2 billion from current spending levels, including reducing the CDBG program by $220 million. President Obama signed this legislation into law on Saturday.

April 8, 2011

FY 2011 Continuing Resolution

It appears that the House, Senate, and White House may have reached a deal on appropriations for the remainder of FY 2011. Senate Majority Leader Harry Reid (D-NV) said Friday morning that he and House Speaker John Boehner (R-OH) have agreed on a deal to cut about $38 billion from current spending levels, but added that Republican insistence on including a policy rider blocking federal funding for Planned Parenthood, is the only stumbling block. However, Speaker Boehner is still consulting with House Republicans on the negotiations. If the House and Senate cannot reach a deal and pass the bill before midnight tonight, the government will shut down. Even if a deal is struck, Congress will still need to pass a short term CR to give lawmakers time to draft the negotiated legislation.

However, the House did pass a stop-gap measure yesterday, H.R. 1363, the Department of Defense and Further Additional Continuing Appropriations Act. The act would provide appropriations for the remainder of FY 2011 for the Department of Defense and extend the CR for discretionary non-military spending an additional week, through April 15. The CR would also cut spending by $12 billion, including reducing rural rental assistance by $24 million and cutting CDBG funding by $280 million. However, the Senate will not consider this particular CR bill and President Obama has threatened to veto the legislation if the Senate does pass it.

The Senate, instead, will offer their own week long CR. Leadership sources say the Democrats’ proposed bill will maintain the levels of the continuing resolution set to expire Friday at midnight, a measure that contained $6 billion in cuts. It will likely include military funds, the details of which are not yet decided.

Since the process is still in flux, NAHMA will provide additional updates on this situation as they become available.

NAHMA has also produced an E-NAHMAnalysis on the impacts of a federal government shutdown on multifamily housing programs. A copy of the analysis can be accessed here: http://www.nahma.org/member/NAHMAAnalysis/ENAHMAnalysis%20Government%20Shutdown.pdf

House Budget Committee Unveils FY 2012 Budget Proposal

This week, House Budget Committee Chairman Paul Ryan (R-WI) introduced the Republican’s FY 2012 budget proposal, titled “A Path to Prosperity.” The Chairman believes by following this proposal Congress could cut $6.2 trillion in government spending over the next decade compared to the President’s budget and $5.8 trillion relative to the current-policy baseline. The House budget is a blue print for spending in FY 2012. The budget does not require the President’s approve nor does it become law.

The Chairman’s mark would significantly decrease the Income Security budget authority, $160 billion in cuts, over the next five years. The Income Security account contains the budget authority for HUD’s and USDA-RHS’s affordable housing programs, welfare programs including food and nutrition assistance and Temporary Assistance for Needy Families, unemployment compensation, disability and retirement insurance, and energy assistance. The Chairman has proposed reducing the Income Security budget authority by $90 billion between FY 2011 and FY 2012. The Income Security budget authority would be reduced by another $70 billion between FY 2012 and FY 2015 before leveling out.

The FY 2012 budget proposed by Chairman Ryan would incorporate several principles espoused by the President’s bipartisan Commission on Fiscal Responsibility and Reform’s December 2010 Report, which include:

Bringing non-security discretionary spending to below FY 2008 levels for the next five years;
Consolidating duplicative federal programs;
Reducing the size of the federal government and sell excess property;
Eliminating earmarks;
Lowering the corporate tax rate and reforming the corporate tax code to close tax loop-holes;

This would include the elimination of the LIHTC and other tax credits that benefit affordable housing; and

Focusing on eliminating improper payments in government programs through anti-fraud measures.

The budget proposal does not provide details on how Congress might achieve these principles.

Chairman Ryan’s FY 2012 budget proposal also suggests winding down and privatizing Fannie Mae and Freddie Mac, increasing guarantee fees the GSEs charge lenders, and discouraging the shift of mortgage guarantees to the Federal Housing Administration and other government-backed entities.

Medicaid, under Chairman Ryan’s proposal, would be turned into a block grant program in which the federal government would send money to states, where governors would use the funding to implement the plans as they see fit.

A copy of the FY 2012 House Budget Committee Proposal can be found here: http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

A copy of the December 2010 President’s Commission on Fiscal Responsibility and Reform Report can be found here: http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

H.R. 4: Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act

On Tuesday, the Senate approved H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act. The House has already passed this legislation. The bill repeals the requirement for businesses to file 1099 tax forms for purchases over $600. The legislation offsets the cost of the repeal by increasing the amount of overpayment for the health care credit included in the Patient Protection and Affordable Care Act of 2010, which is subject to recapture.

The bill will now go to the White House for President Obama's signature into law.

GSE Reform Bills Mark Up

On Tuesday, the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises passed the eight GSE reform bills introduced by Republicans last week. The bills are as follows:

H.R. 31: Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act of 2011. The legislation enhances the authority of FHFA’s Inspector General (IG) and expands reporting requirements to Congress.
H.R. 1221: Equity in Government Compensation Act of 2011. The legislation suspends the compensation packages for executives of Fannie Mae and Freddie Mac and places all other employees on the General Schedule pay scale.
H.R. 1222: GSE Subsidy Elimination Act of 2011. The bill would increase the guarantee fees charged by Fannie Mae and Freddie Mac with respect to single and small multifamily mortgage-backed securities guaranteed by these government sponsored entities (GSEs).
H.R. 1223: GSE Credit Risk Equitable Treatment Act of 2011. The legislation would clarify that Fannie Mae and Freddie Mac will be held to the same standards as any other secondary mortgage market participants under the Dodd-Frank Act.
H.R. 1224: GSE Portfolio Risk Reduction Act of 2011. The legislation would require an annual reduction of Fannie Mae and Freddie Mac’s housing portfolios over a five year period.
H.R. 1225: GSE Debt Issuance Approval Act of 2011.The bill would require the Treasury Department to approve any new debt issuance by the GSEs.
H.R. 1226: GSE Mission Improvement Act of 2011.The bill would repeal the affordable housing goals for Fannie Mae and Freddie Mac.
H.R. 1227: GSE Risk and Activities Limitation Act of 2011. The bill would prohibit the GSEs from offering, undertaking, transacting, conducting or engaging in any new business activities while in conservatorship or receivership.

NAHMA is running these proposals through its public policy process. The bills will now go to the full House Financial Services Committee for consideration.

S. 693: GSE Bailout Elimination and Taxpayer Protection Act

Last week, Sen. John McCain (R-AZ) introduced S. 693, the GSE Bailout Elimination and Taxpayer Protection Act. The legislation would terminate the conservatorships of Fannie Mae and Freddie Mac within two years of enactment of the legislation. The bill also contains several provisions from the House GSE reform bills discussed above, which include:

Repealing the affordable housing goals;
Increasing the guarantee fees charged by Fannie Mae and Freddie Mac for mortgage-backed securities guaranteed by the GSEs; and
Reducing Fannie Mae and Freddie Mac’s housing portfolios over a five year period.

The bill would also repeal the housing trust fund and require the wind down and dissolution of the GSEs over a 10-year period.

The bill has been referred to the Senate Banking Committee; however, it is unlikely the Senate Banking Democrats will consider the legislation or the House GSE reform bills if passed.

Choice Neighborhoods Initiative

NAHMA has voted to support S. 624, the Choice Neighborhoods Authorization Act, and Title I, the Choice Neighborhoods Initiative authorization language, in H.R.762, the Public Housing Reinvestment and Tenant Protection Act of 2011. The language would authorize HUD’s proposed Choice Neighborhoods program. Choice Neighborhoods is a program the Obama Administration first requested in its FY 2010 budget.

The Initiative expands the HOPE VI program beyond public housing by including assisted and private distressed housing as eligible projects for funding and allowing public, private, and non-profit partners to become eligible grant recipients. It is also intended to expand the scope of the program’s initiatives beyond the demolition of distressed housing and help provide reform to school and community programs to help alleviate concentration of poverty in urban areas.

The bills have been introduced in the Senate Banking and House Financial Services Committees.

April 1, 2011

FY 2011 Continuing Resolution

The battle over the FY 2011 budget continued this week with the House and Senate once again failing to reach a compromise on a full-year continuing resolution (CR). Vice President Joseph Biden announced on Wednesday that negotiators had agreed to a $33 billion cut from FY 2010 spending levels in the CR. Nevertheless, the negotiations are still in flux and this number could change. The details of any cuts made would still need to be worked out by the Republicans and Democrats in Congress.

Based on NAHMA’s previous conversation with Senate and House Appropriations staff and previous spending proposals put forward by each chamber, we believe that Congress will include full-funding for all 12-month tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance contracts in the FY 2011 CR. However, we are unsure of what other multifamily housing programs may be subject to funding reductions in the negotiated CR.

NAHMA urges our members to contact their Representatives in both the House and the Senate and let them know you strongly oppose cuts to multifamily housing programs in FY 2011. Please let them know that it is essential to finalize the FY 2011 appropriations for HUD and USDA-Rural Housing Services and to provide:

Full funding for all rental assistance programs, including
All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

The House has announced they will vote on a measure today—H.R. 1255: The Prevention of a Government Shutdown Act. The legislation stipulates that H.R. 1 as passed by the House would be enacted into law on April 6, 2011, if the Senate has not passed an appropriations bill to fund the government for the remainder of FY 2011 However, this move is purely symbolic in Congress’s ongoing budget and spending cut negotiations. The Senate will not consider this legislation and passage of the bill by the House would do nothing to avoid a government shutdown since no deal has been reached with Democrats in the Senate and the White House.

House Financial Services Capital Markets and GSEs Subcommittee Hearing on GSE Reform Bills

Yesterday, the House Financial Services Capital Markets and Government Sponsored Entities (GSE) Subcommittee held a hearing on the GSE reform bills Republican members of the Committee introduced on Tuesday. The bills would provide piecemeal changes to current government sponsored entity (GSE) operations. Summaries of the bills are available below.

All of these bills have been referred to the House Financial Services Committee. NAHMA is running these proposals through its public policy process.

For copies of the legislation, please visit: http://financialservices.house.gov/hearings/hearingDetails.aspx?newsid=1820

GSE Bills Summary

H.R. 31: Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act of 2011. The legislation enhances the authority of FHFA’s Inspector General (IG) and expands reporting requirements to Congress.
H.R. 1221: Equity in Government Compensation Act of 2011. The legislation suspends the compensation packages for executives of Fannie Mae and Freddie Mac and places all other employees on the General Schedule pay scale.
H.R. 1222: GSE Subsidy Elimination Act of 2011. The bill wouldincrease the guarantee fees charged by Fannie Mae and Freddie Mac with respect to single and small multifamily mortgage-backed securities guaranteed by these government sponsored entities (GSEs).
H.R. 1223: GSE Credit Risk Equitable Treatment Act of 2011. The legislation would clarify that Fannie Mae and Freddie Mac will be held to the same standards as any other secondary mortgage market participants under the Dodd-Frank Act.
H.R. 1224: GSE Portfolio Risk Reduction Act of 2011. The legislation would require an annual reduction of Fannie Mae and Freddie Mac’s housing portfolios over a five year period.
H.R. 1225: GSE Debt Issuance Approval Act of 2011.The billwould require the Treasury Department to approve any new debt issuance by the GSEs.
H.R. 1226: GSE Mission Improvement Act of 2011.The bill would repeal the affordable housing goals for Fannie Mae and Freddie Mac.
H.R. 1227: GSE Risk and Activities Limitation Act of 2011. The bill would prohibit the GSEs from offering, undertaking, transacting, conducting or engaging in any new business activities while in conservatorship or receivership.

Panel 1

Edward DeMarco, the Acting Director of the Federal Housing Finance Agency, provided testimony on the first panel. DeMarco said that the elimination of the affordable housing goals would reduce operational and compliance burdens at the GSEs but did not see the elimination as resulting in less attention to affordable housing and underserved market segments.

Subcommittee Ranking Member Maxine Waters (D-CA) asked if the GSEs changed their criteria in order to purchase more mortgages, which resulted in the undermining of the affordable housing goals. DeMarco confirmed that Fannie and Freddie took steps to reduce the underwriting standards from 2005 to 2008 in order to take on more risk and they did invest in mortgages they probably would not have in the past. The GSEs were motivated by market shares, the desire to make more money, and the affordable housing goals, he said.

Rep. Stephen Lynch asked DeMarco what impact the elimination of affordable housing goals, as proposed by H.R. 1226-the GSE Mission Improvement Act of 2011, would have on the Section 202 program. The Congressman praised the Section 202 program, saying it was some of the most successful, best managed, cleanest, safest and desperately needed housing in America. DeMarco was unsure if the GSEs held any Section 202 property mortgages. If they did not, Fannie Mae and Freddie Mac would not expand their products to include these mortgages. If they did, the GSEs would continue to remain active in those markets. He did not expect the removal of the affordable housing goals to significantly affect available elderly housing.

Rep. Judy Biggert (R-IL) asked DeMarco what the impact of the Obama Administration’s first housing finance reform proposal would have on the multifamily mortgage market. This option would include a privatized system of housing finance with the government insurance role limited to FHA, USDA and Department of Veterans’ Affairs’ assistance for narrowly targeted groups of borrowers. DeMarco said he was unsure and would need additional time to look into the question.

Rep. Gwen Moore (D-WI) asked if the private sector take the place of the secondary mortgage market for multifamily mortgages. DeMarco believed the private sector could and any guarantee fees would be risk-based. DeMarco also discussed the fact the multifamily mortgage market had a high level of state and local government involvement, even if the Federal government ceased involvement. A portion of low to moderate income individuals could still be served by the private mortgage market, he said.

Rep. Ed Royce (R-CA) asked DeMarco if the affordable housing goals could ever be consistent with the realities of the GSEs operating in conservatorship. DeMarco said that the newest affordable housing goal—serving underserved markets, as passed in the Housing and Economic Recovery Act (HERA) of 2008—was being implemented in areas where the GSEs already provide support and that the entities would not take on any additional activities to meet this goal. He also did not believe that government backstops were the best answer for the housing market.

Panel 2

The second panel consisted of industry members, trade associations, and think tanks. The entire panel felt the bills were a piecemeal approach to the situation and called for greater comprehensive reform of the GSEs. Almost all panelists felt that there is some role for the federal government in the housing finance market.

President of the Housing Policy Council of the Financial Services Roundtable John H. Dalton, Managing Director of Economics21 Christopher Papagianis, and Resident Fellow for the American Enterprise Institute Ed Pinto supported the elimination of affordable housing goals for the GSEs.

Dalton believed these goals detracted from Fannie Mae and Freddie Mac’s primary mission, ensuring a steady flow of reasonably priced conventional mortgages. Dalton believed that other federal programs should support affordable housing goals. Nevertheless, the Housing Policy Council could support a contribution from the GSEs or their successors to affordable housing programs managed by HUD and/or state housing finance agencies like the Housing Trust Fund in lieu of affordable housing goals, he said. Dalton also supported an explicit, but limited federal guarantee.

Papagianis argued that there were other avenues through which support for affordable housing activities could be carried out, including HUD and FHA. He also stated that public subsidies for affordable housing or higher risk lending should be subject to the regular checks-and-balances of Congressional oversight and appropriations.
Pinto asked the Committee to consider repealing the affordable-housing support fees that would have been directed to the Housing Trust Fund, which were enacted under HERA and currently suspended by FHFA
Bob Nielsen, the Chairman of the Board for National Association of Home Builders (NAHB), and Ron Phillips, the President of the National Association of Realtors, opposed the piecemeal approach the Subcommittee is proposing to GSE reform. He believed this approach would disrupt the housing market and may push the nation back into a deep recession. Instead, they called on the Committee to examine proposals that are more comprehensive.

Nielsen agreed with the Committee leadership and other panelists that private capital must be the dominant source of mortgage credit and it must bear the primary risk in any future housing finance system. However, he did argue that some continuing and predictable government role is necessary to promote investor confidence and ensure liquidity and stability for homeownership and rental housing. This is especially important because private market sources of capital for multifamily financing are not available for all segments of the multifamily market. NAHB’s proposal for housing finance reform is also similar to the Obama Administration’s third option for the long-term structure of the housing finance system, like many other panelists. They call for an explicit federal government guarantee for both single and multifamily mortgages, similar to those that Ginnie Mae provides now. However, this support would only be subject to catastrophic situations when the capital and self-funded insurance resources of private secondary market entities are exhausted.

Nielsen also pointed out the GSE multifamily portfolio has performed quite well, has had low default rates, and is a profitable business. Fannie and Freddie’s multifamily portfolio finances a wide range of multifamily rental properties, which provides housing for very-low to middle income households. The FHA multifamily mortgage insurance programs also fill a need in the multifamily rental market, he said.

For copies of testimony from the hearing, please visit: http://financialservices.house.gov/hearings/hearingDetails.aspx?newsid=1820

Senate Banking Committee Hearing on GSE Reform

On Tuesday, the Senate Banking Committee held a hearing to examine public proposals for the future of the housing finance system. Testimony was given by industry experts, economists, and academics.

Michael Berman, the Chairman of Mortgage Bankers Association (MBA), discussed the impact of government sponsored entity (GSE) reform on the multifamily sector. Fannie Mae and Freddie Mac currently purchase more than half of all multifamily mortgages and loans, he said. Multifamily properties have greater difficulty in attracting private investors, which has significantly limited the private market transactions that have taken place over the last three years. Berman called this situation “undesirable as it is unsustainable.”

Berman said that MBA supports a housing policy that: brings stability and affordability to the single and multifamily mortgage finance markets; provides consumer protections to homebuyers and renters; provides subsidies to fill gaps between low-income households’ incomes and market rents; and supports the development and preservation of affordable single- and multifamily housing. MBA also supported a housing policy that uses the federal government to promote liquidity and stability in the mortgage market. MBA said their proposal for housing finance reform was most similar to Option 3 proposed by the Obama Administration: A privatized system of housing finance with FHA, USDA and Department of Veterans’ Affairs assistance for low- and moderate-income borrowers and catastrophic reinsurance behind significant private capital.

Dr. Arnold Kling, a member of the Mercatus Center Financial Markets Working Group at George Mason University, supported the complete phase out of GSE’s with no government guarantee for the housing market. Kling also advocated for the repeal of Fannie Mae and Freddie Mac’s affordable housing goals. He said if the government wished to support the rental housing market, they should focus on providing additional housing vouchers to renters.

The Chief Economist of Moody’s Analytics, Dr. Mark Zandi, supported a hybrid system that would provide catastrophic insurance on mortgage securities only after major losses, standardize the securitization process, provide additional regulations to the mortgage system, and maintain the 30 year fixed-rate mortgage. Dr. Zandi said Moody’s proposal for housing finance reform was most similar to Option 3 proposed by the Obama Administration, as discussed above, which would also provide appropriate subsidies to disadvantaged households.

Janneke Ratcliffe, a Senior Fellow for the Center for American Progress, believed any attempts at reforming the housing finance market must: provide broad access to access to reasonably priced financing for both homeownership and rental housing so that more families can have safe and sustainable housing options to meet their needs; preserve the 30 year fixed-rate mortgage; and ensure that lenders can competitively offer loans. Ratcliffe emphasized that multifamily rental housing benefited from the same stability the single-family housing market enjoyed from long-term, fixed-rate financing. In order to support affordable housing, the entire housing finance system needed to continue providing access to credit to the market, she said. Ratcliff believe the appropriate roll of government in the housing finance market was to provide a limited catastrophic backstop, backed by the FDIC reinsurance fund.

After the testimony, Senator Richard Shelby (R-AL) questioned the panelists about the reasons for GSE failure. Dr. Zandi took the opportunity to point out that 60 to 80 percent of the multifamily mortgage market over the last two years belonged to Fannie Mae and Freddie Mac. Less than one percent of that portfolio was in default. Dr. Zandi explained that the multifamily mortgage market faced some of the same pressures as the single-family market, but remained disciplined. The multifamily portfolio has conservative underwriting, he said. The GSEs provided a needed service for multifamily housing when the private lenders and guarantors vanished from the market, which made them indispensible to the creation and preservation of multifamily housing, Zandi concluded.

March 18, 2011

H. J. Res. 48: Additional Continuing Appropriations Amendments for FY 2011

Yesterday, Congress passed H.J. Res. 48, a short-term continuing resolution (CR) that would fund government programs at FY 2010 levels. The CR is now extended through April 8, 2011. H. J. Res. 48 also contained $6 billion in spending reductions. The spending reductions will make significant cuts to USDA-RHS single-family housing loans and eliminate HUD’s Brownfields Redevelopment program. The resolution will now go to President Obama to be signed into law.

However, there appears to be no movement on negotiations for H.R. 1, the FY 2011 full-year CR, which would provide funding for government programs at FY 2010 levels through the remainder of the current fiscal year. H.R. 1 contains full funding for rural rental assistance contracts, tenant-based and project-based Section 8 contracts, and Section 202 and 811 PRACs. The House version of H.R. 1 proposes cuts to several HUD grant programs, including Section 202 and 811 new construction funding. The Senate version of H.R. 1 proposes less severe cuts to HUD grant programs and would provide new construction funding for Section 202 and 811 programs. Both bills would provide $500,000 for LEP. Nevertheless, the Senate voted against the passage of both bills last week.

This situation has become even more complicated in both the Senate and House chambers. General consensus is that the government cannot continue to be funded through short-term stopgap CRs. Last week, 10 Republican senators led by David Vitter (R-LA) sent a letter to Majority Leader Harry Reid (D-NV) stating that they would filibuster non-spending related bills until the full-year FY 2011 CR is passed. Sen. Marco Rubio (R-FL) has stated he will oppose any further short-term measures because he believes it is irresponsible to keep the government running in two- to three-week stints. Rep. Jim Jordan (R-OH), chairman of a conservative caucus with more than 170 Republicans, has called for even deeper spending cuts than those passed within the short-term CR.

During the next three weeks, the House and Senate will continue to try to work out a compromise on H.R. 1, the Full Year FY 2011 CR. NAHMA is concerned over Congress’s inability to complete a long-term CR. Short term CRs and continued funding at FY 2010 levels may delay housing assistance payments (HAP) for housing choice voucher, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance contracts. They may also provide only partial funding for HAPs. NAHMA continues actively urging Congress to pass a long term CR that provides full funding for all rental assistance programs.

Full funding for all rental assistance programs, including
All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

NAHMA will continue to work with Congress to ensure adequate funding is appropriated to fully fund all 12-month contracts for tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance in H.R. 1.

H.R. 1209: Section 8 Voucher Reform Act

Yesterday, Rep. Maxine Waters (D-CA) re-introduced the Section 8 Voucher Reform Act. This legislation is quite similar to the language introduced in 2009 (H.R. 3045) in the 111th Congress, rather than the trimmed down version of SEVRA NAHMA and industry colleagues helped craft with the House Financial Services Democrats and HUD last November. SEVRA would make important improvements to the Section 8 voucher program by:

Stabilizing voucher funding by basing it on the previous year's leasing and cost data;
Simplifying the rules for determining rent & income;
Authorizing appropriations for 150,000 new vouchers;
Streamlining inspection of housing units where:

Minor repairs can be made within 30 days;
PHAs may allow occupancy prior to the inspection in buildings that passed an alternative inspection method within the last 12 months; and
Alternative inspection methods include HOME, LIHTC or other inspections that meet HQS standards at least as stringent;

Authorizing project-based preservation vouchers in lieu of enhanced vouchers; and
Authorizing enhanced vouchers for tenants of a project with a HUD-subsidized mortgage when the mortgage matures.

However, the section that authorized Limited English Proficiency (LEP) technical assistance was left out, likely due to the same “germaneness” concerns that arose in the 111th Congress.

The bill has been referred to the House Financial Services Committee.

Senate Banking Committee Hearing on GSE Reform

On Tuesday, the Senate Banking Committee held a hearing on the Obama Administration's report to Congress, focusing on reforming America's housing finance market, including the government-sponsored entities (GSE) Fannie Mae and Freddie Mac. Testimony was provided by Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan.

In Ranking Member Richard Shelby’s (R-AL) opening statement, he discussed his belief that Section 8 and other rental assistance programs needed to be taken into consideration as part of comprehensive housing finance reform.

Secretary Geithner highlighted that Option 1 for GSE reform—A privatized system of housing finance with the government insurance role limited to FHA, USDA and Department of Veterans’ Affairs’ assistance for narrowly targeted groups of borrowers— would require the government to support mortgages and financing for affordable housing. He said the Obama Administration did not support a housing finance market that did not provide government-supported access to loans for affordable housing.

Secretary Donovan focused the majority of his testimony on the need for government support and financing for affordable rental housing in the new housing finance system. In order to advance affordable housing priorities, developers and owners need access to credit to finance mortgages. Right now, Donovan said, the private market would not be able to primarily support affordable multifamily housing financing on its own. The Obama Administration believes there needs to be a balance between homeownership and providing affordable rental housing, he said, to ensure that there are multiple options available to households, which all have different capacities and needs. The Obama Administration also supports a reformed and strengthened FHA that could provide credit to underserved markets and additional financing to affordable rental housing. Donovan stressed that the government must have the capacity to finance and assist developers and owners of affordable rental properties to meet the growing housing needs of low-income Americans.

Although the majority of the questioning focused of the fiscal realities and single-family housing market, some of the questioning focused on the role of GSEs in multifamily housing development and mortgages. Chairman Tim Johnson (D-SD) asked Donovan what his recommendations for multifamily housing financing, including affordable and rural housing, were? Donovan reminded the Chairman that the multifamily mortgages at Fannie Mae and Freddie Mac had the least amount of default and were the still incredibly profitable for the GSEs. He also stressed the need for the government to make a strong commitment to financing multifamily mortgages. Donovan also discussed the need for standardizing mortgages for multifamily housing to decrease interest rates and the general costs associated with the multifamily mortgage market, which would increase the affordability of the properties.

Senator Jack Reed (D-RI) asked about the importance of the Housing Trust Fund in the multifamily housing market. Donovan said that in the last few years, HUD has seen the largest increase in households with worst case housing needs over the last 25 years. There are not a large range of options for low to moderate income households who require rental housing. The Housing Trust Fund would provide a targeted and focused effort to increase the number of affordable housing rental units to low-income Americans, which would also protect against the previous negative impacts the GSEs’ affordable housing goals had on the market, he said.

House Financial Services Committee Approves FY 2012 Budget Views and Estimates

On Tuesday, the House Financial Services Committee approved its “Views and Estimates of the Committee on Financial Services on Matters to be Set Forth in the Concurrent Resolution on the Budget for Fiscal Year 2012.” The Views and Estimates discussed the Committee’s position on programs and funding levels for HUD in FY 2012. While the Committee noted that HUD’s FY 2012 budget request increase was smaller in previous years, the Committee expressed concern over its expansion of 50 percent from FY 2004 to FY 2010.

The Committee also expressed concern over the growing percentage of the budget (now 72 percent) that is dedicated to funding rental assistance programs. The Committee believed this funding growth is not sustainable and called for the reform of HUD’s rental assistance programs—both tenant-based and project-based Section 8—in order to slow their growth and cut costs, lest other HUD programs—like Section 202, Section 811, and Veteran’s vouchers—might be compromised. The Committee stressed that in their reforms of the tenant-based Section 8 voucher program they would like to focus on improving household self-sufficiency and graduating these households out of the assistance program.

The Committee addressed the Obama Administrations’ new housing programs: Transforming Rental Assistance (TRA), Choice Neighborhoods, and the Housing Trust Fund. The Committee stated that in light of the record deficits the United States is now facing, they believed that “prudent fiscal policy requires the Administration to refrain from asking taxpayers to fund new government housing programs.” The Committee also voiced their concern that the Housing Trust Fund duplicated the activities of other programs, like HOME and CDBG. The Committee said they would examine HUD’s TRA initiative in their efforts to reform and reduce the cost of public housing and the project-based Section 8 program.

Finally, the Committee discussed the Section 202 and 811 programs. They believed that P.L. 111-374, the Frank Melville Supportive Housing Investment Act, would provide
flexibility to align Section 811 programs with other funding sources, allowing federal funds to be levered with other funds to make more housing available for the disabled. The Committee also indicated their interest in reviewing the programs to find ways to use unexpended balanced current possessed by both the Section 202 and Section 811 accounts.

H.R. 1111: Decrease Spending Now Act

This week, Rep. Tom Price (R-GA) introduced legislation that would rescind $45 billion of unobligated discretionary appropriations. The Office of Management and Budget would be responsible for determining which programs with unobligated discretionary spending would be impacted by the spending cuts.

This legislation has been referred to the House Appropriations Committee for consideration.

H.R. 709, S. 624: Choice Neighborhoods Authorization Act

This week, Senator Robert Menendez (D-NJ) introduced Senate companion legislation to H.R. 709, the Choice Neighborhoods Authorization Act. S. 624 which would authorize HUD’s proposed Choice Neighborhoods program. Choice Neighborhoods is a program the Obama Administration first requested in its FY 2010 budget.

The bill has been referred to the Senate Banking Committee. NAHMA will be putting this legislation through the public policy process in the near future.

March 11, 2011

H.R. 1: Full Year Continuing Resolution Act

On Wednesday, the Senate voted on both the House version of H.R. 1, which would have provided a $100 billion reduction in spending when compared to the FY 2011 budget request, and the Senate substitute version of the continuing resolution (CR), which would have provided a $51 billion reduction in spending when compared to the FY 2011 budget request. Neither bill was approved. Ten Democrats voted against the Senate version of the CR because they thought the spending cuts did not go far enough.

Congress has one week to determine if they will take up a new proposal or extend the CR until April. No indications have been made as to what they will do at this time.
NAHMA urges our members to contact their Representatives in both the House and the Senate and let them know you strongly oppose cuts to multifamily housing programs in FY 2011. Please let them know that it is essential to finalize the FY 2011 appropriations for HUD and USDA-Rural Housing Services and to provide:

Full funding for all rental assistance programs, including
All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

NAHMA opposes any and all funding levels below the need to fully-fund existing tenant-based Section 8, project-based Section 8, Section 202 and 811, and rural rental assistance contracts. We also oppose cutting funding for Section 202 and 811 new construction. We will continue to work with Congress to ensure these programs receive full funding for all existing contracts and pursue additional funding to develop additional affordable housing units.

Senate Banking Hearing on State of the Housing Market

On Wednesday, the Senate Banking Committee held a hearing on the state of the housing market. Although the majority of the testimony focused on the single-family housing market, the Chief Economist of the National Association of Home Builders David Crowe and the Executive Director from the Center for Housing Policy Jeffrey Lubell did discuss the multifamily rental housing market.

Crowe focused on recent multifamily housing construction statistics. He explained that multifamily housing construction starts have experienced great volatility in recent months. Crowe believed the variation would continue through 2011 and stabilize by the end of 2012. Nevertheless, he said that multifamily housing starts are projected to increase 21 percent in 2011 and 40 percent in 2012, which would still be 38 percent below NAHB’s estimate of the long-term sustainable level.

Crowe also discouraged efforts to eliminate or weaken well-established housing policies, like the Low-Income Housing Tax Credit (LIHTC), because it would hurt the production of necessary affordable housing in the future.

Lubell discussed housing affordability issues for the lowest-income renters. He explained that there are approximately 17.1 million very low-income renters, 41 percent of which have worst case housing needs and spend more than half of their income on
housing costs, without receiving government rental assistance. The number of renters with worst-case needs increased by nearly 20 percent between 2007 and 2009, Lubell explained. This increase is unparalleled in at least the last 25 years. Furthermore, he discussed how only 60 affordable and adequate units were available for every 100 very low-income renters in 2009 and how incomes of working families with the worst case housing needs declined four to five percent between 2008 and 2009. These problems were exacerbated in rural areas, Lubell said.

Lubell also discussed the recession’s impact on multifamily construction and rehabilitation. The lack of financing and uncertainty about future demand greatly slowed the pace of new apartment construction, he said. Lubell explained that reliable capital flows were still a barrier to sustained multifamily production both now and in the near future.

House Appropriations T-HUD Subcommittee Hearing on FY 2012 Budget

Thursday, the House Appropriations Subcommittee on Transportation and Housing and Urban Development, and Related Agencies held a hearing on HUD’s FY 2012 budget request. Testimony was given by HUD Secretary Shaun Donovan.

The Secretary stated the HUD FY 2012 budget request was made in response to fiscal and economic realities. HUD made difficult decisions to focus to protect current low-income residents, while reducing spending in other program areas to meet the Office of Budget and Management’s freeze of discretionary spending levels. Secretary Donovan reaffirmed the Administration’s commitment to providing full funding for all existing rental assistance contracts like housing choice vouchers, project-based Section 8, Section 202, and Section 811. He also discussed HUD’s plan to help leverage private capital for public housing rehabilitation and repairs, the Transforming Rental Assistance initiative.

During the hearing, Chairman Tom Latham (R-IA) expressed his interest in ensuring existing residents receiving rental assistance are protected. However, the Chairman said the Committee would need to take a hard look at HUD grant programs and identify areas where reasonable savings could be achieved. The Chairman also indicated his desire to provide funding for HUD at FY 2008 levels overall for FY 2012. He noted that tenant and project-based Section 8 programs would eat into the majority of the budget and asked Secretary Donovan what programs would be cut to address this funding increased in these programs. Donovan said that enacting the Section 8 Voucher Reform Act would help reduce spending inefficiencies in the housing choice voucher program and reduce the costs going forward.

Ranking Member John Olver (R-MA) inquired about the cuts to the Section 202 and 811 programs. The Secretary said they were difficult, but necessary cuts considering the fiscal environment. He said HUD was prioritizing existing units and assistance over the construction of new units.

GSE Reform

NAHMA is in the preliminary stages of developing a policy on the Obama Administration’s three proposals to reform the government-sponsored entities (GSE) Fannie Mae and Freddie Mac. The Administration’s proposals are intended to jump-start the discussion process on how to reform the mortgage market. The actual policy development and legislative proposal process is expected to take several years.

We realize this issue will evolve of the course of the discussion and the development of legislation, so NAHMA would like to request your preliminary feedback on these proposals to help us solidify a more formal position. Please provide any feedback or thoughts on NAHMA’s policy position on GSE reform should be by COB Friday March 25 for consideration.

The Obama Administration’s would ideally like a housing finance system that:

*Creates a robust private mortgage market and phase out Fannie Mae and Freddie Mac by:

Increasing the price of guarantees fees at the GSEs to reflect the risk;
Reducing conforming loan limits on the size of mortgaged Fannie and Freddie may guarantee;
Phasing in a 10 percent down payment requirement;
Winding down Fannie Mae and Freddie Mac’s investment portfolios at an annual rate of no less than 10 percent per year; and
Allowing the current increase in FHA conforming loan limits to expire on October 1, 2011.

*Fixes flaws in the mortgage market by:

Strengthening anti-predatory lending protections;
Improving mortgage-underwriting standards;
Requiring lenders to verify a borrowers’ ability to pay;
Providing increased mortgage disclosures for consumers;
Increasing accountability and transparency in the securitization process:
Enacting stronger capital standards to help banks withstand sudden shocks;
Reforming mortgage servicing and foreclosure processes; and
Forming a new task force on coordinating and consolidating existing housing finance agencies.

*Targets government support for affordable housing by:

Reforming and strengthening the FHA by lowering the maximum loan-to-value ratios for qualifying mortgages and adjusting pricing;
Strengthening government support for affordable rental housing, like expanding the FHA’s capacity to support lending to the multifamily market;
Making capital available to credit-worthy borrowers in all communities; and
Supporting a dedicated funding source for targeted access and affordability initiatives.

The Obama Administration sees three potential options for government involvement in the future housing finance market:

Option 1: Privatized system of housing finance with the government insurance role limited to FHA, USDA and Department of Veterans’ Affairs’ assistance for narrowly targeted groups of Borrowers.
Option 2: Privatized system of housing finance with assistance from FHA, USDA and Department of Veterans’ Affairs for narrowly targeted groups of borrowers and a guarantee mechanism to scale up during times of crisis.
Option 3: Privatized system of housing finance with FHA, USDA and Department of Veterans’ Affairs assistance for low- and moderate-income borrowers and catastrophic reinsurance behind significant private capital

For a more detailed look at each proposal, a copy of the full report from the Administration can be found here: http://www.treasury.gov/initiatives/Pages/housing.aspx

Again, we would request that you please provide any feedback or thoughts on what NAHMA’s policy position on GSE reform should be by COB Friday March 25 for consideration.

March 4, 2011

H.R. 1: Department of Defense and Full Year Continuing Appropriations Act , 2011

Today, the Senate Appropriations Committee released its legislation for the FY 2011 full-year continuing resolution (CR). Under the Senate version of H.R. 1, all programs would be funded at FY 2010 levels unless otherwise specified. The Senate version of H.R.1, however, provides FY 2011 overall funding $51 billion below the Obama Administration’s FY 2011 budget request. The House version of H.R. 1 provides FY 2011 total funding $100 billion below the Obama Administration’s FY 2011 budget request.

The Senate proposed FY 2011 CR restores funding for many multifamily housing programs that would be cut under the CR passed by the House in mid-February. Proposed funding in the Senate CR for HUD multifamily programs is as follows:

Tenant-Based Section 8: $18.5 billion (total); $16.7 billion (contract renewals); includes an advanced appropriation of $4 billion for FY 2012

House FY 2011 CR: $18.1 billion (total); $16.7 billion (contract renewals); includes an advanced appropriation of $4 billion for FY 2012
FY 2011 Budget Request: $19.6 billion (total); $17.3 billion (contract renewals)
FY 2010 Appropriation: $18.2 billion (total); $16.339 billion (contract renewals)

Project-Based Section 8: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.

House FY 2011 CR: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
FY 2011 Budget Request: $9.4 billion total; $9.04 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding level (full-funding for all contract renewals was determined to be lower in mid-2010);
FY 2010 Appropriation: $8.5 billion (total); $8.325 billion (contract renewals); $393 million as an FY 2011 Advanced Appropriation included in the total funding level

Section 202: $825 million; includes funding for new construction and existing PRACs

House FY 2011 CR: $237 million, PRACS renewals only
FY 2011 Budget Request: $274 million
FY 2010 Appropriation: $825 million

Section 811: $300 million; includes funding for new construction and existing PRACs

House FY 2011 CR: $90 million, PRACS renewals only
FY 2011 Budget Request: $90 million
FY 2010 Appropriation: $300 million

Transforming Rental Assistance (TRA): $0

House FY 2011 CR: $0
FY 2011 Budget Request: $300 million
FY 2010 Appropriation: n/a

HOPE VI: $200 million; up to $65 million for the Choice Neighborhoods demonstration program

House FY 2011 CR: $0 and rescinds $198 million in unobligated funds.
FY 2011 Budget Request: $0
FY 2010 Appropriation: $200 million; up to $65 million for the Choice Neighborhoods demonstration program

Choice Neighborhoods: $0

House FY 2011 CR: $0
FY 2011 Budget Request: $250
FY 2010 Appropriation: Up to $65 million from the HOPE VI account for the Choice Neighborhoods demonstration program

HOME: $1.825 billion

House FY 2011 CR: $1.65 billion
FY 2011 Budget Request: $1.65 billion
FY 2010 Appropriation: $1.825 billion

CDBG: $3.99 billion for grants

House FY 2011 CR: $1.5 billion
FY 2011Budget Request: $4.38 billion; $3.99 billion for grants
FY 2010 Appropriation: $4.45 billion; $3.99 billion for grants

LEP: $500,000

House FY 2011 CR: $500,000
FY 2011 Budget Request: $0
FY 2010 Appropriation: $500,000

Affordable Housing Trust Fund: $0

House FY 2011 CR: $0
FY 2011 Budget Request: $1 billion
FY 2010 Appropriation: n/a

The Senate CR also restored funding to several rural housing programs that would be cut under the CR as passed by the House in mid-February. Proposed funding in the Senate FY 2011 CR for USDA-RHS multifamily programs are as follows:

Rural Rental Assistance: $965 million

House FY 2011 CR: $956 million
FY 2011 Budget Request: $966 million
FY 2010 Appropriation: $980 million

Section 515 Housing Direct Loans: $69.5 million (The Senate version of H.R. 1 did not specify an alternative gross obligation for Section 515 loans. NAHMA is confirming this is the intended funding level).

House FY 2011 CR: $23.5 million
FY 2011 Budget Request: $95 million
FY 2010 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $15 million

House FY 2011 CR: $12.5 million
FY 2011 Budget Request: $129 million, no interest subsidies included
FY 2010 Appropriation: $129 million, no interest subsidies included

Multifamily Housing Revitalization Program: $40.8 million; $14 million for vouchers

House FY 2011 CR: $16.4 million for vouchers
FY 2011 Budget Request: $18 million for housing vouchers
FY 2010 Appropriation: $43.2 million; $16.4 million in vouchers, $25 million for the demonstration program, and $2 million for non-profit loans

For a full copy of the Senate FY 2011 CR, click here: http://appropriations.senate.gov/news.cfm?method=news.view&id=5b0966b4-d47b-4ae1-8c24-a2ce4f695c55

For a full copy of the House FY 2011 CR passed in mid-February, click here: http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/2011crapprops/AppropCRFinal_xml.pdf

The Senate plans to vote on both the House passed FY 2011 CR and the Senate proposed FY 2011 CR on Tuesday.

H. J. Res. 44: FY 2011 Continuing Resolution

On Wednesday, Congress passed a two-week extension to the FY 2011 continuing resolution (CR). The CR contains funding to allow all government agencies and programs to continue operating at FY 2010 appropriations levels through March 18, 2011, which will give Congress more time to pass a full year continuing resolution for the remainder of FY 2011.

During the next two weeks, the House and Senate will try to work out a compromise on H.R. 1, the Full Year FY 2011 CR. NAHMA is becoming concerned over Congress’s inability to complete a long-term CR. Short term CRs and continued funding at FY 2010 levels may delay housing assistance payments (HAP) for housing choice voucher, project-based Section 8, Section 202 and 811, and rural rental assistance contracts. They may also provide only partial funding for HAPs. NAHMA continues actively urging Congress to pass a long term CR that provides full funding for all rental assistance programs.

Full funding for all rental assistance programs, including
All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm
If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/
NAHMA will continue to work with Congress to ensure adequate funding is appropriated to fully fund all 12-month contracts for tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance in H.R. 1.

House Financial Services Committee FY 2012 HUD Budget Hearing

On Tuesday, the House Financial Services Committee held a hearing on the FY 2012 HUD budget request. HUD Secretary Shaun Donovan provided testimony.

During introductory statements, several Republicans criticized HUD for allowing over 70 percent of the HUD budget to be dedicated to rental assistance programs. They asked SecretaryDonovan to focus on reforming rental assistance programs and the Federal Housing Administration to make them more cost-efficient and effective.

Donovan stated the HUD FY 2012 budget request was made in response to fiscal and economic realities. HUD made difficult decisions to focus to protect current low-income residents, while reducing spending in other program areas to meet the Office of Budget and Management’s freeze of discretionary spending levels. Donovan reaffirmed the Administration’s commitment to providing full funding for all existing rental assistance contracts like housing choice vouchers, project-based Section 8, Section 202, and Section 811. Donovan also discussed HUD’s plan to help leverage private capital for public housing rehabilitation and repairs, the Transforming Rental Assistance initiative.

The majority of the questions from Congressional members focused on the single-family mortgage market. However, Insurance, Housing, and Community Opportunity Subcommittee Chairwoman Judy Biggert asked Donovan if HUD has given any additional thought to how motivate households to move on from federal assistance program. The Secretary informed her that 90 percent of households in public housing that can work do work. The average stay in public housing for households that were not elderly or disabled was four to five years, Donovan said. He also stated that the Family Self Sufficiency program has been essential to get families back on their feet and in to market rate housing.

Senate Banking Committee FY 2012 HUD Budget Hearing

On Thursday, the Senate Appropriations Transportation-HUD Subcommittee held a hearing on the FY 2012 HUD budget request. HUD Secretary Shaun Donovan provided testimony.

The majority of the questions from Ranking Member Susan Collins (R-ME) focused on homelessness assistance. However, she did inquire about the additional cost of renewing the long-term project-based Section 8 contracts that have already received appropriations through the contract length, which account for 17 percent of the portfolio. Donovan said that in FY 2012 the first time renewals of long-term project-based Section 8 contracts would increase annual renewals by $230 million. Over the course of FY 2013-2016, 600 more contracts expire, which would cause annual renewals to increase by $450 million in FY 2016. Overall, the account would increase by $1.5 billion by FY 2015 for long-term contract renewals. Ranking Member Collins asked how HUD planned to offset these additional costs. Donovan explained that the HUD PBCA rebid would help improve the management of the project-based Section 8 program and reduce administration costs by $37 million in FY 2012. the Secretary also discussed how the Mark to Market program has reduced excess rent payments for the program. The Secretary asked the Ranking Member to consider these costs in comparison to the alternatives. Providing voucher to fill the void of eliminating public housing and project-based Section 8 program is much more expensive than keeping the current programs in operation. Finally, the Secretary said HUD and Treasury were trying to increase the private capital available to affordable housing programs through the LIHTC reform proposals included in the FY 2012 budget request.

Senator Roy Blunt (R-MO) asked how HUD will be streamlining duplicative programs as suggested in the FY 2012 budget. Donovan said that he has been working with USDA and Veterans Affairs to determine where they can simplify and streamline lending programs that overlap. He believed there was more the federal government could do to reduce duplicative programs and collaborate between agencies. However, he cautioned that this did not necessarily mean consolidating duplicative programs. Some agencies are better at targeting and operating programs regionally than others are, Donovan said.

H.R. 4: Small Business Paperwork Mandate Elimination Act of 2011

Yesterday, the House overwhelmingly passed H.R. 4, which would repeal the expansion of information reporting requirements for payments of $600 or more to corporations and for rental property expense payments that were included in the health care bill as cost offsets. The legislation would offset the cost of the repeal by increasing the amount of overpayment for the health care credit included in the Patient Protection and Affordable Care Act of 2010, which is subject to recapture.

The bill has been transferred to the Senate for consideration.

S. 475: Enacting FY 2012 Budget Proposed Terminations

Yesterday, Senator Tom Coburn (R-OK) introduced legislation that would enact President Obama's recommendations for program terminations in the FY 2012 budget. Eliminations that impact affordable multifamily housing would include:

USDA-RHS Section 538 Multifamily Housing and Community Facilities Loan Guarantees; and
USDA-RHS Multifamily Housing Revitalization Demonstration Program.

The bill has been referred to the Senate Committee on Appropriations.

February 25, 2011

FY 2011 Continuing Resolution

Last week, the House passed H.R. 1, the FY 2011 Full Year Continuing Resolution, which would fund most government programs at FY 2010 levels for the remainder of FY 2011 (ending September 30, 2011) and cuts $61 billion in funding when compared to FY 2010 appropriations levels. President Obama has publically stated that he will veto H.R. 1, as written, if both the House and Senate pass it.

However, the Senate democratic leadership has indicated they will not pass the bill as written, and they will push for an extension of the current continuing resolution (CR), set to expire on March 4, 2011. The CR proposed by the Senate would extend funding at FY 2010 levels for government programs for two to four weeks in order to delay a potential government shutdown and give the House and Senate more time to compromise on FY 2011 funding levels. The Senate CR would also provide a decrease of $4 billion under FY 2010 levels; however, it is uncertain what programs would be reduced or eliminated at this time. The Senate plans to consider this legislation early next week before the expiration of the current CR.

At the National Housing Conference’s FY 2012 Budget Briefing today, HUD staff said that they would have enough funding for all project-based Section 8 contract renewals for the month of March through the current CR, which expires March 4.

NAHMA continues to urge our members to contact their Representatives and Senators to let them know you strongly oppose cuts to multifamily housing programs in FY 2011. Please let them know you support:

Full funding for all rental assistance programs, including
-All 12-month project-based Section 8 contracts;
-All Housing Choice Voucher contract renewals;
-PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
-Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

NAHMA remains in contact with House and Senate appropriators and we are fighting for full funding for 12-month contracts for tenant-based Section 8, project-based Section 8, Section 202 and 811 PRACs, and rural rental assistance.

Congress in Recess

This week, both the House and the Senate adjourned for a week recess. They will return to work on Monday, February 28.

February 18, 2011

FY 2012 Presidential Budget

On Monday, President Obama submitted his Fiscal Year (FY) 2012 budget request to Congress. The budget proposes freezing all discretionary spending for FY 2012, which could result in cuts to several federal programs.

The Obama Administration has proposed a HUD budget of $48 billion, an increase of $1.9 billion over FY 2010 appropriations and a decrease of $500 million below the FY 2011 Presidential budget request. The FY 2012 budget provides reduces or eliminates funding for several HUD grant programs in comparison with FY 2010 appropriations. Funding increases were provided only for programs that assist the neediest Americans. Please note that funding for government programs is currently being provided through a CR at FY 2010 levels because Congress has yet to enact appropriations legislation for FY 2011 (for more information on FY 2011 continuing resolution please see below).

Proposed funding in the FY 2012 budget for HUD multifamily programs are as follows:

Tenant-Based Section 8: $19.2 billion total funding; $17.1 billion for contract renewals
o FY 2011 Budget Request: $19.6 billion (total); $17.3 billion (contract renewals)
o FY 2010 Appropriation: $18.2 billion (total); $16.339 billion (contract renewals)

Project-Based Section 8: $9.4 billion total; $9.1 billion for contract renewals
o FY 2011 Budget Request: $9.4 billion total; $9.04 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding level (full-funding for all contract renewals was determined to be lower in mid-2010);
o FY 2010 Appropriation: $8.5 billion (total); $8.325 billion (contract renewals); $393 million as an FY 2011 Advanced Appropriation included in the total funding level

Section 202: $757 million
o The FY 2012 budget proposal restores funding for capital advances.
o FY 2011 Budget Request: $274 million
o FY 2010 Appropriation: $825 million

Section 811: $196 million
o The FY 2012 budget proposal restores funding for capital advances.
o The FY 2012 proposal does not include $114 million for 811 vouchers, which has been shifted to the tenant-based Section 8 account.
o FY 2011 Budget Request: $90 million
o FY 2010 Appropriation: $300 million

Transforming Rental Assistance (TRA): $200 million
o Administration has requested Congress to enact a demonstration program that would offer PHAs and private owners of RAP, Rent Supp, and old Mod Rehab properties the option of converting to long-term project based rental assistance (a revised version of the Preservation, Enhancement, and Transforming Rental Assistance Proposal circulated in May 2010).
o FY 2011 Budget Request: $300 million
o FY 2010 Appropriation: n/a

HOPE VI: $0
o FY 2011 Budget Request: $0
o FY 2010 Appropriation: $200 million; up to $65 million for the Choice Neighborhoods demonstration program

Choice Neighborhoods: $250
o FY 2011 Budget Request: $250
o FY 2010 Appropriation: Up to $65 million from the HOPE VI account for the Choice Neighborhoods demonstration program

HOME: $1.65 billion
o FY 2011 Budget Request: $1.65 billion
o FY 2010 Appropriation: $1.825 billion

CDBG: $3.7 billion
o FY 2011Budget Request: $4.38 billion; $3.99 billion for grants
o FY 2010 Appropriation: $4.45 billion; $3.99 billion for grants

LEP: $0
o FY 2011 Budget Request: $0
o FY 2010 Appropriation: $500,000

Affordable Housing Trust Fund: $1 billion
o FY 2011 Budget Request: $1 billion
o FY 2010 Appropriation: n/a

In the Department of Treasury/IRS’s FY 2012 budget proposal, the Administration has included two potential LIHTC reforms. The first would allow for household income averaging to meet the 60 percent of AMI cap. The second increases the yield on 4 percent tax credits on rehabilitation and preservation deals for affordable housing units.

For USDA-RHS, the Obama Administration has proposed significant spending cuts in FY 2012 from the USDA Rural Housing Service (RHS) programs below FY 2010 estimated spending levels.

Proposed funding in the FY 2012 budget for USDA-RHS multifamily programs are as follows:

Rural Rental Assistance: $907 million
o FY 2011 Budget Request: $966 million
o FY 2010 Appropriation: $980 million

Section 515 Housing Direct Loans: $95 million
o FY 2011 Budget Request: $95 million
o FY 2010 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $0
o The Administration has decided to propose zeroing out this account in FY 2012. Many loans administered by this program have defaulted, significantly increasing the cost of operating the Section 538 program.
o FY 2011 Budget Request: $129 million, no interest subsidies included
o FY 2010 Appropriation: $129 million, no interest subsidies included

Multifamily Housing Revitalization Program: $16 million for vouchers
o FY 2011 Budget Request: $18 million for housing vouchers
o FY 2010 Appropriation: $43.2 million; $16.4 million in vouchers, $25 million for the demonstration program, and $2 million for non-profit loans

For a full copy of the FY 2012 budget and the appendix, click here: http://www.whitehouse.gov/omb/budget.

NAHMA is currently working on an analysis of the FY 2012 budget request which will provide additional details on these proposed funding levels, as well as Administrations proposals for Section 202 and 811, LIHTC, and TRA legislative reforms.

H.R. 1: FY 2011 Full-Year Continuing Resolution

The current continuing resolution, which is funding federal programs at 2010 levels, expires on March 4.

On February 11, House Appropriations Committee Chair Hal Rogers (R-KY) introduced H.R. 1, which would provide a full year continuing resolution (CR) for FY 2011. Under this bill, all programs would be funded at FY 2010 levels unless otherwise specified. The House is expected to vote on the bill today before leaving for a week long recess.

The bills does provide some significant changes to multifamily housing program FY 2010 funding levels. Proposed funding in the CR for HUD multifamily programs are as follows:

Tenant-Based Section 8: $18.1 billion (total); $16.7 billion (contract renewals)
o FY 2011 Budget Request: $19.6 billion (total); $17.3 billion (contract renewals)
o FY 2010 Appropriation: $18.2 billion (total); $16.339 billion (contract renewals)

Project-Based Section 8: $9.3 billion total; $8.95 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding levels.
o FY 2011 Budget Request: $9.4 billion total; $9.04 billion (contract renewals); $400 million as an FY 2012 Advanced Appropriation included in the total funding level (full-funding for all contract renewals was determined to be lower in mid-2010);
o FY 2010 Appropriation: $8.5 billion (total); $8.325 billion (contract renewals); $393 million as an FY 2011 Advanced Appropriation included in the total funding level

Section 202: $237 million, PRACS renewals only
o FY 2011 Budget Request: $274 million
o FY 2010 Appropriation: $825 million

Section 811: $90 million, PRACS renewals only
o FY 2011 Budget Request: $90 million
o FY 2010 Appropriation: $300 million

Transforming Rental Assistance (TRA): $0
o FY 2011 Budget Request: $300 million
o FY 2010 Appropriation: n/a

HOPE VI: $0
o FY 2011 CR also rescinds $198 million in unobligated funds.
o FY 2011 Budget Request: $0
o FY 2010 Appropriation: $200 million; up to $65 million for the Choice Neighborhoods demonstration program

Choice Neighborhoods: $0
o FY 2011 Budget Request: $250
o FY 2010 Appropriation: Up to $65 million from the HOPE VI account for the Choice Neighborhoods demonstration program

HOME: $1.65 billion
o FY 2011 Budget Request: $1.65 billion
o FY 2010 Appropriation: $1.825 billion

CDBG: $1.5 billion
o FY 2011Budget Request: $4.38 billion; $3.99 billion for grants
o FY 2010 Appropriation: $4.45 billion; $3.99 billion for grants

LEP: $500,000
o FY 2011 Budget Request: $0
o FY 2010 Appropriation: $500,000

Affordable Housing Trust Fund: $0
o FY 2011 Budget Request: $1 billion
o FY 2010 Appropriation: n/a

Proposed funding in the FY 2011 CR for USDA-RHS multifamily programs are as follows:

Rural Rental Assistance: $956 million
o FY 2011 Budget Request: $966 million
o FY 2010 Appropriation: $980 million

Section 515 Housing Direct Loans: $23.5 million
o FY 2011 Budget Request: $95 million
o FY 2010 Appropriation: $69.5 million

Section 538 Housing Loan Guarantees: $12.5 million
o FY 2011 Budget Request: $129 million, no interest subsidies included
o FY 2010 Appropriation: $129 million, no interest subsidies included

Multifamily Housing Revitalization Program: $16.4 million for vouchers
o FY 2011 Budget Request: $18 million for housing vouchers
o FY 2010 Appropriation: $43.2 million; $16.4 million in vouchers, $25 million for the demonstration program, and $2 million for non-profit loans

For a full copy of the FY 2011 CR, click here: http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/2011crapprops/AppropCRFinal_xml.pdf

At press time, project-based Section 8 renewals are fully funded in the CR. However, we are very concerned that HR 1 may not cover the cost of PRAC renewals. We also oppose cutting funding for Section 202 and 811 new construction. We are actively working to correct this situation on the Senate side.

President Obama has publically stated his intention to veto H.R. 1, if Congress passes it as currently written. The President believes the bill undermines critical priorities and national security in the funding reductions, which may curtail long-term economic growth and job creation. Senate Appropriations Committee Chairman Daniel Inouye issued similar statements, calling the House cuts a “meat cleaver” approach which will cost jobs and undo the economic recovery. Please see http://appropriations.senate.gov/ to read Senator Inouye’s statements in their entirety.

The Senate has already adjourned for the Presidents’ Day recess. Senators will not consider their version of the continuing resolution before returning to Washington on February 28. The House will adjourn when consideration of HR 1 is finished.

In the meantime, NAHMA members are strongly urged to use the opportunity over the next week to contact the senators and representatives while they are in their districts. The House, Senate and White House has turned up the rhetoric on the continuing resolution, with House Leaders adopting a “take it or leave it” approach on the bill. Speaker Boehner has said he does not want to pass another short-term CR. The possibility of a government shut-down is being openly discussed by House members. It is essential for the senators and representatives to hear directly from their constituents that:

A government shut-down is unacceptable;
Congress must finish its work on the FY 2011 appropriations; and
Congress must uphold the government’s contractual obligations with housing providers to fully fund Section 8 and PRAC contract renewals.

H.R. 4: Repealing 1099 Reporting Requirements

Yesterday, the House Ways and Means Committee passed H.R. 4. The legislation would repeal the Patient Protection and Affordable Care Act’s expansion of 1099 reporting requirements for payments of $600 or more to corporations. No offset is specified for this legislation

The legislation will now go to the House floor for a vote.

H.R. 627: Home Energy Loss Prevention Act

Last Friday, Rep. Emmanuel Cleaver (D-MO) introduced H.E. 627, the Home Energy Loss Prevention Act. The legislation would require energy audits to be conducted for any single-family and multifamily housing purchased using federally related housing loans. HUD would determine who is a qualified individual to conduct the audit and how the audit would be done. It would also require an energy audit to be done on a home that will be purchased with a federal housing loan at least 5 years before the sale of that home.

The bill has been referred to the House Financial Services Committee.

H.R. 709: Choice Neighborhoods Authorization Act

This week, Rep. Albio Sires (D-NY) introduced legislation, H.R. 709, which would authorize HUD’s proposed Choice Neighborhoods program. Choice Neighborhoods is a program the Obama Administration first requested in its FY 2010 budget.

The bill has been referred to the House Financial Services Committee.

S. 317: Affordable Housing Preservation and Revitalization Act

This week, Senator Ron Wyden (D-OR) introduced legislation that would permit residual receipts to be transferred with project-based Section 8 affordable housing properties that are sold to non-profits, provided the non-profits commit to preserving and maintaining the housing stock as affordable. Details were not available at press time.

The bill has been referred to the Senate Banking Committee.

February 11, 2011

FY 2011 Budget and Appropriations

This week, the chairmen of the House Committees on Budget and Appropriations released their proposed discretionary spending caps for the federal government and the individual appropriations subcommittees for FY 2011. Although House Appropriations Chair Hal Rogers (R-KY) initially proposed cuts of $74 billion below the President’s FY 2011 budget request, he announced Wednesday that he will seek even deeper cuts of $100 billion below the President’s FY 2011 request, estimated to be at $974 billion in FY discretionary budget authority (BA). The Committee is seeking a 16 percent reduction in the Transportation-HUD spending account, possibly more.

For more information on House Appropriations Committee funding levels, please click here: http://republicans.appropriations.house.gov/_files/2311SubcommitteeAllocationsforFY11ContinuingResolution302bs.doc

NAHMA fears there may be significant cuts to affordable housing programs. So far,
House Appropriations Chairman Rogers has listed 70 spending cuts that he would like to include in the continuing resolution (CR) bill. They are: $237 million reduction in rural development program accounts, $530 million reduction to HUD’s Community Development Fund, and almost $900 million in cuts to energy efficiency and renewable energy programs. For a full list of specified cuts, please visit: http://appropriations.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=259
Chairman Rogers intends the CR to fund the federal government for the seven months remaining in FY 2011. A more detailed list of program cuts will be released when the bill is formally introduced.

We urge our members to contact their Representatives in both the House and the Senate and let them know you strongly oppose cuts to multifamily housing programs in FY 2011 or FY 2012. Please let them know you support:

Full funding for all rental assistance programs, including
All 12-month project-based Section 8 contracts;
All Housing Choice Voucher contract renewals;
PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
Section 521 Rural Rental Assistance contracts; and
Continued funding for new construction under the Section 202 and Section 811 programs.

House Financial Services Committee Oversight Plan for the 112th Congress

Yesterday, the House Financial Services Committee approved its oversight plan for the 112th Congress. Although the majority of the plan focused on financial, insurance, and credit market oversight, the plan did include some housing priorities that would impact multifamily rental housing.

First, the Committee announced they would examine proposals to modify or terminate the government sponsored entities (GSE) Fannie Mae and Freddie Mac as well as consider the appropriate role for the Federal government in the secondary mortgage market.

Second, the Committee announced their intention to review the HUD and USDA-Rural Housing Service budgets and examine current housing programs in an effort to identify program spending cuts or eliminate inefficient and duplicative programs, including unauthorized programs. Programs specified for examination included FHA Multifamily Housing loans, the Section 8 housing choice voucher program, and HOPE VI.

The Committee also plans to conduct a hearing with the HUD Inspector General (IG) to discuss improper implementation, poor oversight, and misuse of funds in HUD’s programs based on reports received from the IG’s office.

In order to comply with the House of Representatives rules on spending cuts, the Committee has included proposals in its oversight plan to cut or eliminate housing programs that are inefficient, duplicative, outdated, or already administered by State or local governments. The Committee plans to review several programs for possible cuts, elimination, or consolidation into other Federal programs.

The Committee has recommended eliminating funding for:

HOPE VI;
Choice Neighborhoods;
Brownfields Economic Development Initiative;
Rural Housing and Economic Development;
Neighborhood Stabilization Program;
Sustainable Communities; and
Neighborworks America.

The Committee has recommended rescinding unobligated funds from:

Neighborhood Stabilization Program;
Public Housing Capital Fund,
FHA Refinance Program;
Making Home Affordable Programs; and
Emergency Homeowner Relief Fund.

Finally, the Committee has also recommended scaling back and reworking the funding formulas for Community Development Block Grants (CDBG), with additional Congressional oversight to be held on CDBG in the future.

A full copy of the House Financial Services Committee’s 112th Congressional Oversight Plan may be found at: http://financialservices.house.gov/media/pdf/112thOvPlan.pdf

GSE Reform Proposals from FY 2012 Budget Announced

Today, the Departments of Treasury and Housing and Urban Development offered a report to Congress describing their proposals for reforming the government sponsored entities (GSE) Fannie Mae and Freddie Mac. Treasury and HUD have offered three recommendations that would phase out the GSEs over time and shift the mortgage burden to private entities. NAHMA staff participated on a conference call earlier today with HUD’s Office of Policy Development and Research to discuss these proposals.

The first proposal would allow for a robust private mortgage market and phasing out of Fannie Mae and Freddie Mac by:

Increasing the price of guarantees fees at the GSEs to reflect the risk;
Reducing conforming loan limits on the size of mortgaged Fannie and Freddie may guarantee;
Phasing in a 10 percent down payment requirement;
Winding down Fannie Mae and Freddie Mac’s investment portfolios at an annual rate of no less than 10 percent per year; and
Allowing the current increase in FHA conforming loan limits to expire on October 1, 2011.

The second proposal would work to fix flaws in the mortgage market by:

Strengthening anti-predatory lending protections;
Improving mortgage-underwriting standards;
Requiring lenders to verify a borrowers’ ability to pay;
Providing increased mortgage disclosures for consumers;
Increasing accountability and transparency in the securitization process:
Enacting stronger capital standards to help banks withstand sudden shocks;
Reforming mortgage servicing and foreclosure processes; and
Forming a new task force on coordinating and consolidating existing housing finance agencies.

Finally, the third proposal would help the government target support for affordable housing by:

Reforming and strengthening the FHA by lowering the maximum loan-to-value ratios for qualifying mortgages and adjusting pricing;
Strengthening government support for affordable rental housing, like expanding the FHA’s capacity to support lending to the multifamily market;
Making capital available to credit-worthy borrowers in all communities; and
Supporting a dedicated funding source for targeted access and affordability initiatives.

A copy of the full report from the Administration can be found here: http://www.treasury.gov/initiatives/Pages/housing.aspx

Senate Appropriations Committee Members Announced

Last week, the Senate determined the membership for the Senate Appropriations Committee. Members include:

Chairman Daniel Inouye (D-HI)
Patrick Leahy (I-VT)
Tom Harkin (D-IA)
Barbara Mikulski (D-MD)
Herb Kohl (D-WI)
Patty Murray (D-WA)
Diane Feinstein (D-CA)
Richard Durbin (D-IL)
Tim Johnson (D-SD)
Mary Landrieu (D-LA)
Jack Reed (D-RI)
Frank Lautenberg (D-NJ)
Bill Nelson (D-NE)
Mark Pryor (D-AR)
Jon Tester (D-MT)
Sherrod Brown (D-OH)

Ranking Member Thad Cochran (R-MS)
Richard Shelby (R-AL)
Kay Bailey Hutchinson (R-TX)
Lamar Alexander (R-TN)
Susan Collins (R-ME)
Lisa Murkowski (R-AK)
Lindsey Graham (R-SC)
Mark Kirk (R-IL)
Dan Coats (R-IN)
Roy Blunt (R-MI)
Jerry Moran (R-KS)
John Hoeven (R-ND)
Ron Johnson (R-WI)

The Subcommittee on Agriculture membership will consist of: Chairman Kohl, Ranking Member Blunt, and Senators Harkin, Feinstein, Johnson (D-SD), Nelson, Pryor, Brown, Cochran, McConnell, Collins, Moran, and Hoeven.

The Subcommittee on Transportation and Housing and Urban Development membership will consist of: Chairwoman Murray, Ranking Member Collins, and Senators Mikulski, Kohl, Durbin, Leahy, Harkin, Feinstein, Johnson (D-SD), Lautenberg, Pryor, Shelby, Hutchison, Alexander, Kirk, Coats, Moran, Blunt, and Johnson (R-WI).

Senate Banking Committee Members Announced

Last week, the Senate determined the membership for the Senate Banking Committee. Members include:

Chairman Tim Johnson (D-SD)
Jack Reed(D-RI)
Chuck Schumer (D-NY)
Bob Menendez (D-NJ)
Daniel Akaka (D-HI)
Sherrod Brown (C-OH)
Jon Tester (D-MT)
Herb Kohl (D-WI)
Mark Warner (D-VA)
Jeff Merkley (D-OR)
Michael Bennet (D-CO)
Kay Hagan (D-SC)

Ranking Member Richard Shelby (R-AL)
Mike Crapo (R-ID)
Bob Corker (R-TN)
Jim DeMint (R-SC)
David Vitter (R-LA)
Mike Johanns (R-NE)
Pat Toomey (R-PA)
Mark Kirk (R-IL)
Jerry Moran (R-KS)
Roger Wicker (R-MS)

The Subcommittee on Housing, Transportation, and Community Development membership will consist of: Chairman Menendez, Ranking Member Vitter, and Senators Johnson, Reed, Schumer, Akaka, Brown, Tester, Kohl, Warner, Merkley, Hutchison, Crapo, Corker, DeMint, and Johanns.

Senate Finance Committee Members Announced

Last week, the Senate determined the membership for the Senate Finance Committee. Members include:

Chairman Max Baucus (D-MT)
Jay Rockefeller (D-WV)
Kent Conrad (D-ND)
Jeff Bingaman (D-NX)
John Kerry (D-MA)
Ron Wyden (D-OR)
Chuck Schumer (D-NY)
Debbie Stabenow (D-MI)
Maria Cantwell (D-WA)
Bill Nelson (D-FL)
Bob Menendez (D-NJ)
Thomas Carper (D-DE)
Benjamin Cardin (D-MD)

Ranking Member Orrin Hatch (R-UT)
Chuck Grassley (R-IA)
Olympia Snowe (R-ME)
Jon Kyl (R-AZ)
Mike Crapo (R-ID)
Pat Roberts (R-KS)
John Ensign (R-NV)
Mike Enzi (R-WY)
John Cornyn (R-TX)
Tom Coburn (R-OK)
John Thune (R-SD)

H.R. 559, S. 30: Extending the GO Zone Placed-In-Service Date

This week, Rep. Cedric Richmond (D-LA) and Sen. Mary Landrieu (D-LA) introduced H.R. 559 and S. 30 respectively, which would extend the placed-in-service date for the low-income housing credit rules applicable to the GO Zone until January 1, 2013.

The legislation has been referred to the House Ways and Means and Senate Finance Committees for consideration.

H.R. 584: Repealing 1099 Reporting Requirements

This week, Rep. Joe Courtney (R-CT) introduced H.R. 584. The legislation would repeal the Patient Protection and Affordable Care Act’s expansion of 1099 reporting requirements for payments of $600 or more to corporations.

The legislation would require $44 billion in unobligated discretionary funding to be rescinded. The Office of Management and Budget would be responsible for determining which accounts would be rescinded.

The legislation has been referred to the House Ways and Means Committee for consideration.

January 28, 2011

State of the Union

On Tuesday, President Obama gave his yearly State of the Union address before both chambers of Congress. His address mainly focused on domestic issues.

President Obama spent a significant amount of time addressing the federal deficit and debt levels. The 2011 deficit is expected to be $1.5 trillion, the largest in the history of the United States. The President proposed freezing annual domestic spending for the next five years, which the Administration estimates will reduce the deficit by more than $400 billion over the next decade.

The President also recognized that Congress was considering deeper cuts. He asked them to ensure any cuts or eliminations made do not negatively impact America’s “most vulnerable citizens.”

Because domestic spending only represents 12 percent of the Federal budget, President Obama also called upon Congress to seriously consider reducing the costs of Medicare, Medicaid, and Social Security.

In line with the National Commission on Fiscal Responsibility and Reform and the President's Economic Recovery Advisory Board’s proposals, the President called on Congress to simplify corporate taxes, remove tax “loopholes,” and lower the tax rates. NAHMA is concerned by this appeal because the “loopholes” referenced by the Commission are actually tax credits. Closing corporate tax loopholes may eliminate tax credits that aid in affordable housing development and preservation, including the low-income housing tax credit, new market credits, historic rehabilitation tax credits, and energy tax credits. The irony of this proposal to eliminate unspecified tax loopholes, which may include the LIHTC, is that the Department of Housing and Urban Development supports the LIHTC as a tool to expand the stock of affordable housing, especially for the low-income elderly and disabled populations. Eliminating the LIHTC would be a devastating blow to the developers of affordable properties and low-income American families in need of affordable housing. NAHMA will strongly oppose any effort to eliminate the LIHTC program.

In addition, President Obama announced the Administration will undertake a review of government regulations. This campaign could possibly impact regulations issued by HUD, RHS, and Treasury-IRS.

Finally, the President discussed the need for streamlining the bureaucracy. As one example of federal redundancy, the President observed, “There are at least five different agencies that deal with housing policy.” To that end, President Obama announced that the Administration is preparing a proposal to merge, consolidate, and reorganize the federal government. His proposal will be submitted to Congress for consideration later this year. Based on the President’s remarks, it is reasonable to assume his proposal would reduce the number of agencies involved in overseeing and operating U.S. housing policy.

NAHMA will continue to monitor these proposals as the Administration moves them forward. We will inform members as more information on these initiatives becomes available. NAHMA remains committed to ensuring multifamily housing programs receive full funding and operate in the most efficient and effective manner.

H. Res. 38: Reducing Non-Security Spending to FY 2008 Levels

This week, the House of Representatives adopted a new resolution that would reduce non-security spending for FY 2011 to FY 2008 levels or less. H. Res. 38 directs the House Budget Committee Chairman to set an appropriations allocation for the remainder of FY 2011 that assumes non-security spending at FY 2008 levels or below. Opponents of the measure argued that it gives too much authority to the Budget Committee Chairman to decide on a spending cap “without having to face a vote of the House” and “without defining `non-security' spending or specifying exactly what those levels might be.”This resolution is part of the Republican Party’s effort to reduce Federal government spending by $100 billion this year.

NAHMA has begun meeting with House and Senate Appropriations Committee staff to discuss government spending for multifamily housing programs for FY 2011 and 2012. Staff members have indicated it is unlikely that spending levels will be immediately reduced to FY 2008 levels in any FY 2011 appropriations legislation. Nevertheless, they do believe that overall spending for federal programs will be reduced, possibly below FY 2010 levels during the coming fiscal years.

In the meantime, we urge our members to contact their Representatives in both the House and the Senate and let them know you strongly oppose cuts to multifamily housing programs in FY 2011 or FY 2012. Please let them know you support:

· Full funding for all rental assistance programs, including:

o All 12-month project-based Section 8 contracts;
o All Housing Choice Voucher contract renewals;
o PRAC contracts for Section 202 elderly housing and Section 811 housing for the disabled programs;
o Section 521 Rural Rental Assistance contracts; and

· Continued funding for new construction under the Section 202 and Section 811 programs.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

H.R. 408, S. 178: Spending Reduction Act

This week, both Congressman Jim Jordan (R-OH) and Senator Jim DeMint (R-SC) introduced legislation that would carry out the Republican Study Committee’s proposal to reduce Federal spending by $2.5 billion through FY 2021.

The legislation would replace the spending levels in the current FY 2011 continuing resolution (CR) with non-defense, non-homeland security, non-veterans spending at FY 2008 levels. The legislative language does not provide any other exceptions for discretionary spending. If this legislation is passed, tenant-based Section 8 funding could be reduced by $2 billion and project-based Section 8 funding could be reduced by almost $3 billion. If this appropriations level is finalized, owners could once again be dealing with short-funding and late HAPs. Funding for rural housing rental assistance could be reduced by $500 million, over half the account.

The second provision of the legislation would require a spending limit on discretionary spending for the next 10 years by eliminating automatic increases for inflation. This section would also eliminate advance appropriations and hold FY 2012-2021 spending levels at FY 2006 appropriations levels.

The third provision eliminates all unallocated stimulus funding.

Finally, the legislation eliminates several discretionary spending programs including: the HOPE IV program, Community Development Block Grants, Department of Energy grants for low-income housing weatherization, and the Energy Star program. The bill repeals the Davis-Bacon act and removes Fannie Mae and Freddie Mac from federal control.

The bills have been referred to the relevant House and Senate Committees.

Nevertheless, NAHMA believes that enacting this legislation, as written, will be difficult given that Democrats control the Senate and White House and oppose many of the proposed cuts.

S. 18: Repealing 1099 Reporting Requirements

This week, Sen. Mike Johanns (R-NE) introduced S.18. The legislation would repeal the Patient Protection and Affordable Care Act’s expansion of 1099 reporting requirements for payments of $600 or more to corporations. The legislation has been referred to the Senate Finance Committee for consideration.

January 21, 2011

Republican Study Committee Proposed Spending Reduction Act

This week, the Republican Study Committee (RSC) proposed introducing a Spending Reduction Act, which would save the federal government $2.5 trillion over the next 10 years. The draft legislation would cut funding for several multifamily housing programs.

The first provision of the draft legislation would replace the spending levels in the current FY 2011 continuing resolution (CR) with non-defense, non-homeland security, non-veterans spending at FY 2008 levels. The legislative language does not provide any other exceptions for discretionary spending. If this legislation was passed, tenant-based Section 8 funding could be reduced by $2 billion and project-based Section 8 funding would be reduced by almost $3 billion. If this appropriations level is finalized, owners could once again be dealing with short-funding and late HAPs, similar to the summer of 2007. Funding for rural housing rental assistance could be reduced by $500 million, over half the account. The RSC estimates this will save the government $80 billion.

The second provision of the draft legislation would require a spending limit on discretionary spending for the next 10 years by eliminating automatic increases for inflation. This section would also eliminate advance appropriations and hold FY 2012-2021 spending levels at FY 2006 appropriations levels.

The third provision would eliminate all unallocated stimulus funding, which the RSC estimates will save the government $45 billion.

Finally, the legislation also proposes eliminating several discretionary spending programs including: the HOPE IV program, Community Development Block Grants, Department of Energy grants for low-income housing weatherization, and the Energy Star program. The draft legislation also would repeal the Davis-Bacon act and remove Fannie Mae and Freddie Mac from federal control.

Although House GOP leaders have not yet embraced the proposal, the RSC counts more than 165 Republicans as members. This suggests a sizable chunk of the new GOP majority plans to try to follow through on a campaign pledge to reduce spending. NAHMA expects Rep. Jim Jordan (R-OH) to introduce this legislation. It is important to note that Sen. Jim DeMint (R-SC) is also part of this effort.

Nevertheless, enacting the proposal, as written, is highly unlikely, given that Democrats control the Senate and White House and would oppose many of the cuts.

NAHMA urges our members to contact their Representatives in both the House and the Senate and let them know you strongly oppose any cuts to multifamily housing programs in FY 2011 and in the future. Please let them know you support:

Full funding for all multifamily housing programs, including:

Full funding for all 12-month project-based Section 8 contracts;
Continued funding for new construction for the Section 202 and Section 811 programs; and

Full funding of PRAC contracts for Section 202 and 811 programs; and
$500,000 for LEP translations.

If you would like to contact your Senators, please visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm

If you would like to contact your Member of the House of Representatives, please visit: http://www.house.gov/writerep/

House Approves Democrat Financial Services Committee Members

This week, the House approved the following Democratic Party members for House Financial Services Committee membership: Reps. Maxine Waters (D-CA), Carolyn Maloney (D-NY), Luis Gutierrez (D-IL), Nydia Velazquez (D-NY), Mel Watt (D-NC), Gary Ackerman (D-NY), Brad Sherman (D-CA), Gregory Meeks, (D-NY), Mike Capuano (D-MA), Ruben Hinojosa (D-TX), William Lacy Clay (D-MO), Carolyn McCarthy (D-NY), Joe Baca (D-CA), Steven Lynch (D-MA), Brad Miller (D-NC), David Scott (D-GA), Al Green (D-TX), Emmanuel Cleaver (D-MO), Gwen Moore (D-WI), Keith Ellison (D-MN), Ed Perlmutter (D-CO), Joe Donnelly (D-IN), Andre Carson (D-IN), Jim Himes (D-CT), Gary Peters (D-MI), and John Carney (D-DE).

Rep. Barney Frank (D-MA) will serve as the Ranking Member on this Committee. Rep. Luis Gutierrez was announced as the new Ranking Members of the Housing and Community Opportunity Subcommittee this week. Rep. Maxine Waters will serve as the Ranking Member on the Capital Markets Subcommittee.

January 14, 2011

House Republicans Announce Financial Services Committee Members

This week, the House approved the following Republican Party members for House Financial Services Committee membership: Reps. Pete King (R-NY), Ed Royce (R-CA), Frank Lucas (R-OK), Ron Paul (R-TX), Don Manzullo (R-IL), Walter Jones (R-NC), Judy Biggert (R-IL), Gary G. Miller (R-CA), Shelly Moore Capito (R-WV), Jeb Hensarling (R-TX), Scott Garett (R-NJ), Randy Neugebauer (R-TX), Patrick McHenry (R-NC), John Campbell (R-CA), Michelle Bachmann (R-MN), Kenny Marchant (R-TX), Thaddeus McCotter (R-MI), Kevin McCarthy (R-CA), Steve Pearce (R-NX), Bill Posey (R-FL), Mike Fitzpatrick (R-PA), Lynn Westmoreland (R-GA), Blaine Luetkemeyer (R-MO), Bill Huizenga (R-MI), Sean Duffy (R-WI), Nan Hayworth (R-NY), Jim Renacci (R-OH), Robert Hurth (R-VA), Robert Dold (R-IL), David Schweikert (R-AZ), Michael Grimm (R-NY), Francisco Canseco (R-TX), and Steve Stivers (R-OH).

Rep. Spencer Baucus (R-AL) will be the Chairman of this Committee.

House Approves Democrat Appropriations Committee Members

This week, the House approved the following Democratic Party members for House Appropriations Committee membership: Reps. Marcy Kaptur (D-OH), Pete Visclosky (D-ID), Nita Lowey (D-NY), Jose Serrano (D-NY), Rosa DeLauro (D-CT), Jim Morna (D-VA), John Olver (D-MA), Ed Pastor (D-AZ), David Price (D-NC), Maurice Hinchey (D-NY), Lucille Roybal-Allard (D-CA), Sam Farr (D-CA), Jesse Jackson (D-IL), Chaka Fattah (D-PA), Steve Rothman (D-NJ), Sanford Bishop (D-GA), Barbara Lee (D-CA), Adam Schiff (D-CA), Mike Honda (D-CA), and Betty McCollum (D-MN).

Rep. Norm Dicks (D-VA) will be the Ranking Member on this Committee.

House Approves Democrat Ways and Means Committee Members

This week, the House approved the following Democratic Party members for House Ways and Means Committee membership: Reps. Charles Rangel (D-NY), Pete Stark (D-CA), Jim McDermott (D-WA), John Lewis (D-GA), Richard Neal (D-MA), Xavier Becerra (D-CA), Lloyd Doggett (D-TX), Mike Thompson (D-CA), John Larson (D-CT), Earl Blumenauer (D-OR), Ron Kind (D-WI), Bill Pascrell (D-NJ), Shelley Berkley (D-NV), and Joe Crowley (D-NY).

Rep. Sander Levin (D-MI) will be the Ranking Member on this Committee.

H.R. 4: Repealing 1099 Reporting Requirements

This week, Rep. Daniel Lungren (R-CA) introduced H.R. 4. The legislation would repeal the Patient Protection and Affordable Care Act’s expansion of 1099 reporting requirements for payments of $600 or more to corporations.

The legislation has been referred to the House Ways and Means Committee for consideration.

H.R. 233: No One Strike Eviction Act of 2011

Earlier this week, Rep. Sheila Jackson Lee (D-TX) introduced H.R. 233, the No One Strike Eviction Act of 2011. This legislation would reform the provisions requiring `one-strike' eviction from public and federally assisted housing. The bill seeks to protect innocent tenants in public housing and Section 8 housing from eviction resulting from criminal activity of their household members or guests. The bill would add language so that criminal or drug-related criminal activity that was engaged in by a member of a tenant's household, guest or other person under the tenant's control, would not be grounds to evict a tenant as long as they did not know and should not have known of the activity.

This legislation has been referred to the House Financial Services Committee. It is extremely similar to H.R. 173, the One Strike and You're Out! Act of 2007, which NAHMA opposed during the 110th Congress. The bill undermined HUD’s “One Strike Rule,” which protects tenants from drug-related criminal activity.

H.R. 284: Veterans, Women, Families with Children, and Persons With Disabilities Housing Fairness Act of 2011

This week, Rep. Al Green (D-TX) introduced H.R. 284, the Veterans, Women, Families with Children, and Persons With Disabilities Housing Fairness Act of 2011. The bill would authorize $42.5 million for the Fair Housing Initiatives Program. It would also authorize $20 million for each of the next five years to allow HUD to test for discrimination in home buying, renting, or financing. The bill would provide $5 million for each of the next five years as grants to private entities to study housing discrimination.

The language of the bill is extremely similar to H.R. 476, the Housing Fairness Act, Rep. Green introduced in the 111th Congress. NAHMA is concerned the level of testing recommended in the legislation is excessive. We feel that the discrimination testing measures already in place at HUD are more than adequate.

The legislation has been referred to the House Financial Services Committee.

H.R. 287: Homes for Heroes Act of 2011

This week, Rep. Green also introduced H.R. 287, the Homes for Heroes Act. The bill would provide housing assistance and technical assistance grants for very low-income veterans and authorize the creation of a Special Assistant for Veterans Affairs within HUD. It would also offer additional housing vouchers for homeless veterans and include veterans’ interests in housing planning.

The legislation has been referred to both the House Financial Services and Ways and Means Committees.

January 10, 2011

House Updates Rules for 112th Congress

Last week, the House of Representatives approved a set of new rules for the consideration of legislation during the 112th Congress. These new provisions make some intriguing changes to the existing rules.

The House included a clause requiring Members of Congress to submit a separate statement citing the power or powers under the Constitution authorizing the enactment of a bill or resolution when submitting that legislation for consideration.

The new rules also state that the House may not vote on bills or resolutions that have not been made available to Members of Congress for at least three calendar days. Committees must also make all legislation they are considering publically available for at least 24 hours before they can mark up the acts. Committees will also be required, to the maximum extent possible, to make videos and audio recordings of hearings available to the public.

The new House rules have replaced the current “pay-as-you-go” requirements with a "cut-as-you-go" requirement. The provision prohibits consideration of a bill, joint resolution, conference report, or amendment that has the net effect of increasing mandatory spending within a five-year or ten-year budget window. The “cut-as-you-go” requirement will not apply to tax cuts, alternative minimum tax relief, or the potential repeals of the Patient Protection and Affordable Care Act and Education Affordability Reconciliation Act of 2010.

The House rules now limit the ability of Congress to provide advanced appropriations by establishing an aggregate spending ceiling. Furthermore, general appropriations bills must include a “spending reduction” account, detailing the amount Congress has reduced appropriations spending and indicated that such savings should be counted towards spending reduction. The general appropriations bills may not increase spending unless they provide offsets of equal or greater value.

Please note that the Senate has not implemented these rules.

H.R. 201: Removing Reward for Section 8 Fraud Act

Last week, Rep. Elton Gallegly (R-CA) introduced legislation would amend Section 12 of the United States Housing Act of 1937 to close a loophole that allows Project-Based Section 8 properties to lower rents for families who are repaying the government when welfare fraud has been detected. Gallegly also introduced this legislation at the request of AHMA-PSW members in the 111th Congress.

Passed in 1998, the Quality Housing and Work Responsibility Act of 1998 was intended to prohibit the owners and operators of the Section 8 programs from lowering the rent for tenants who commit welfare fraud or who refuse to participate in a self sufficiency program. However, the law only specifically identified PHA’s as part of the Section 8 program, and was not applied to residents residing in Project-Based Section 8 properties.
The legislation closes the loophole by prohibiting privately owned Section 8 properties or contract administrators from decreasing rent levels for any household whose welfare benefits are reduced because the welfare agency has determined and verified:

The family has committed welfare fraud; and/or
The enforced sanction on the household is a result of noncompliance with a requirement to participate in an economic self-sufficiency program.

The bill has been referred to the House Financial Services Committee. NAHMA strongly supports this bill.

H.R. 60 and 144: Repealing 1099 Reporting Requirements

Last week, Reps. Steve Scalise (D-LA) and Daniel Lungren (R-CA) introduced H.R. 60 and H.R. 144, respectively. Both pieces of legislation would repeal the Patient Protection and Affordable Care Act’s expansion of 1099 reporting requirements for payments of $600 or more to corporations.

These pieces of legislation have been referred to the House Ways and Means Committee for consideration.

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